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Bitcoin: Economics, Technology, and Governance


  • Rainer Böhme
  • Nicolas Christin
  • Benjamin Edelman
  • Tyler Moore


Bitcoin is an online communication protocol that facilitates the use of a virtual currency, including electronic payments. Bitcoin's rules were designed by engineers with no apparent influence from lawyers or regulators. Bitcoin is built on a transaction log that is distributed across a network of participating computers. It includes mechanisms to reward honest participation, to bootstrap acceptance by early adopters, and to guard against concentrations of power. Bitcoin's design allows for irreversible transactions, a prescribed path of money creation over time, and a public transaction history. Anyone can create a Bitcoin account, without charge and without any centralized vetting procedure—or even a requirement to provide a real name. Collectively, these rules yield a system that is understood to be more flexible, more private, and less amenable to regulatory oversight than other forms of payment—though as we discuss, all these benefits face important limits. Bitcoin is of interest to economists as a virtual currency with potential to disrupt existing payment systems and perhaps even monetary systems. This article presents the platform's design principles and properties for a nontechnical audience; reviews its past, present, and future uses; and points out risks and regulatory issues as Bitcoin interacts with the conventional financial system and the real economy.

Suggested Citation

  • Rainer Böhme & Nicolas Christin & Benjamin Edelman & Tyler Moore, 2015. "Bitcoin: Economics, Technology, and Governance," Journal of Economic Perspectives, American Economic Association, vol. 29(2), pages 213-238, Spring.
  • Handle: RePEc:aea:jecper:v:29:y:2015:i:2:p:213-38 Note: DOI: 10.1257/jep.29.2.213

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    References listed on IDEAS

    1. Marie Briere & Kim Oosterlinck & Ariane Szafarz, 2013. "Virtual Currency, Tangible Return: Portfolio Diversification with Bitcoin," Working Papers CEB 13-031, ULB -- Universite Libre de Bruxelles.
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    Blog mentions

    As found by, the blog aggregator for Economics research:
    1. Virtual Frenzies: Bitcoin and the Block Chain
      by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets on 2015-09-21 18:11:12
    2. Virtual Frenzies: Bitcoin and the Block Chain
      by Stephen G. Cecchetti in Huffington Post Business on 2015-10-01 23:03:16


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    Cited by:

    1. Patrick Waelbroeck, 2018. "An Economic Analysis of Blockchains," CESifo Working Paper Series 6893, CESifo Group Munich.
    2. Christian Haddad & Lars Hornuf, 2016. "The Emergence of the Global Fintech Market: Economic and Technological Determinants," Research Papers in Economics 2016-10, University of Trier, Department of Economics.
    3. repec:oup:revfin:v:21:y:2017:i:1:p:7-31. is not listed on IDEAS
    4. Gandal, Neil & Hamrick, JT & Moore, Tyler & Oberman, Tali, 2017. "Price Manipulation in the Bitcoin Ecosystem," CEPR Discussion Papers 12061, C.E.P.R. Discussion Papers.
    5. Pieters, Gina & Vivanco, Sofia, 2017. "Financial regulations and price inconsistencies across Bitcoin markets," Information Economics and Policy, Elsevier, vol. 39(C), pages 1-14.
    6. Fantazzini, Dean & Nigmatullin, Erik & Sukhanovskaya, Vera & Ivliev, Sergey, 2016. "Everything you always wanted to know about bitcoin modelling but were afraid to ask. I," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 44, pages 5-24.
    7. Fry, John & Cheah, Eng-Tuck, 2016. "Negative bubbles and shocks in cryptocurrency markets," International Review of Financial Analysis, Elsevier, vol. 47(C), pages 343-352.
    8. Aaron Kumar & Christie Smith, 2017. "Crypto-currencies – An introduction to not-so-funny moneys," Reserve Bank of New Zealand Analytical Notes series AN2017/07, Reserve Bank of New Zealand.
    9. repec:spr:binfse:v:59:y:2017:i:6:d:10.1007_s12599-017-0499-8 is not listed on IDEAS
    10. Pavel Ciaian & Miroslava Rajcaniova & d’Artis Kancs, 2016. "The digital agenda of virtual currencies: Can BitCoin become a global currency?," Information Systems and e-Business Management, Springer, vol. 14(4), pages 883-919, November.
    11. Wilko Bolt & Maarten van Oordt, 2016. "On the Value of Virtual Currencies," Staff Working Papers 16-42, Bank of Canada.
    12. Christian Catalini & Catherine Tucker, 2016. "Seeding the S-Curve? The Role of Early Adopters in Diffusion," NBER Working Papers 22596, National Bureau of Economic Research, Inc.
    13. Lars Hornuf, 2016. "The Emergence of the Global Fintech Market: Economic and Technological Determinants," IAAEG Discussion Papers until 2011 201606, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    14. Christian Haddad & Lars Hornuf, 2016. "The Emergence of the Global Fintech Market: Economic and Technological Determinants," CESifo Working Paper Series 6131, CESifo Group Munich.
    15. Belomyttseva Olga S., 2015. "Conceptual Framework for the Definition and Regulation of Virtual Currencies: International and Russian practices / Konceptualni okvir za definicijo in regulacijo virtualnih valut: mednarodne in ruske," Naše gospodarstvo/Our economy, De Gruyter Open, vol. 61(5), pages 32-39, October.
    16. Urquhart, Andrew, 2016. "The inefficiency of Bitcoin," Economics Letters, Elsevier, vol. 148(C), pages 80-82.
    17. Hermann Elendner & Simon Trimborn & Bobby Ong & Teik Ming Lee, 2016. "The Cross-Section of Crypto-Currencies as Financial Assets: An Overview," SFB 649 Discussion Papers SFB649DP2016-038, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
    18. Anne Haubo Dyhrberg, 2015. "Bitcoin, Gold and the Dollar – a GARCH Volatility Analysis," Working Papers 201520, School of Economics, University College Dublin.
    19. repec:eee:jeborg:v:141:y:2017:i:c:p:188-195 is not listed on IDEAS
    20. repec:eee:finlet:v:23:y:2017:i:c:p:300-305 is not listed on IDEAS

    More about this item

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation


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