Bitcoin dilemma: Is popularity destroying value?

S. Thomas Kim

Finance Research Letters, 2020, vol. 33, issue C

Abstract: I measure the amount of congestion in the Bitcoin network by the time to execute a trade and find that congestion is harming Bitcoin's ability to function as a method of trade. The average time to execute a Bitcoin transaction increased from 30 min in 2016 to 413 min in 2018. I find that the congestion is associated with higher transaction fees and reduced volume. The congestion is also creating a distortion in Bitcoin price. The relationship between congestion and price is strongest during the business hours of East Asia.

Keywords: Bitcoin; Confirmation time; Congestion; Scalability (search for similar items in EconPapers)
JEL-codes: E42 E44 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:33:y:2020:i:c:s154461231930176x

DOI: 10.1016/j.frl.2019.07.001

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