Bitcoin: Money or Financial Investment?

Scott Wolla

Page One Economics Newsletter, 2018, 1-6

Abstract: Bitcoin has become a cultural and financial phenomenon. While many people have heard of Bitcoin, far fewer understand it. In short, Bitcoin is a digital currency, or \\"cryptocurrency,\\" that allows person-to-person transactions independent of the banking system. Bitcoin is not a physical coin that you keep in your purse or wallet. Rather, it is a virtual currency?a digital computer code you store in a virtual wallet in cyberspace and access with a computer or smartphone app. Some see Bitcoin as revolutionary because it allows people to transfer money to each other very easily (like sending an email), even across international borders. Lately, however, many people are buying this virtual currency purely as a financial investment, hoping it will appreciate, rather than using it for transactions. So which is it?currency or financial asset? Or perhaps the line dividing one from the other is not very clear.

Date: 2018
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