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Argument by False Analogy: The Mistaken Classification of Bitcoin as Token Money

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  • ALISTAIR MILNE

Abstract

This paper documents inconsistent terminologies and misleading analogies in current discussions of digital money and payments. It offers a more consistent framework for understanding the potential of technological innovation in providing the functions of money and payments: as media of exchange, stores of value, and units of account and the implications of cryptographic technologies underpinning cryptocurrencies for the future of money and payments. These could support efficiency gains in money and payments, but decentralization is not inherent to their application. Radical reform leading to improved economic outcomes is conceivable, but not through disruptive displacement of existing institutional arrangements.

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  • Alistair Milne, 2024. "Argument by False Analogy: The Mistaken Classification of Bitcoin as Token Money," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 56(8), pages 2199-2222, December.
    • Handle: RePEc:wly:jmoncb:v:56:y:2024:i:8:p:2199-2222
    DOI: 10.1111/jmcb.13061
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    References listed on IDEAS

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    1. Rod Garratt & Michael Junho Lee & Brendan Malone & Antoine Martin, 2020. "Token- or Account-Based? A Digital Currency Can Be Both," Liberty Street Economics 20200812, Federal Reserve Bank of New York.
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    7. B. W. Barnard, 1917. "The Use of Private Tokens for Money in the United States," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 31(4), pages 600-634.
    8. Kahn, Charles M. & Roberds, William, 2009. "Why pay? An introduction to payments economics," Journal of Financial Intermediation, Elsevier, vol. 18(1), pages 1-23, January.
    9. Meaning, Jack & Dyson, Ben & Barker, James & Clayton, Emily, 2018. "Broadening narrow money: monetary policy with a central bank digital currency," Bank of England working papers 724, Bank of England.
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    Cited by:

    1. Bindseil, Ulrich & Coste, Charles-Enguerrand & Pantelopoulos, George, 2025. "Digital money and finance: a critical review of terminology," Working Paper Series 3022, European Central Bank.

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