On the transaction cost of Bitcoin

Thomas Kim

Finance Research Letters, 2017, vol. 23, issue C, 300-305

Abstract: Using a unique data on Bitcoin quotes in 16 different currencies, this paper examines the empirical transaction costs of Bitcoin in international transactions. We find that the transaction cost of Bitcoin is lower than that of retail foreign exchange markets. Bitcoin markets have, on average, 2% narrower bid-ask spreads than retail foreign exchange markets and, when the U.S. dollar is converted to other currencies via Bitcoin, the resulting exchange rates are, on average, 5% better than the retail foreign exchange rate. We find that Bitcoin's simpler infrastructure is a source of the cost advantage.

Keywords: Bitcoin; Foreign exchange; Transaction cost; Digital currency; International fund transfer (search for similar items in EconPapers)
JEL-codes: E42 F31 G15 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (78)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:23:y:2017:i:c:p:300-305

DOI: 10.1016/j.frl.2017.07.014

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