Bitcoin is Memory

Abstract

We maintain that the crypto-currency bitcoin is a practical application of what is termed “memory” in the monetary economics literature. After reviewing the theoretical literature on money and memory, we offer a brief overview of the bitcoin protocol and argue that, like memory, bitcoin functions as a public record-keeping device. Finally, we provide evidence that — in line with the standard theoretical account of memory — bitcoin use has soared as the expected cost of storing traditional monies increased.

Keywords: bitcoin, crypto-currency, currency competition, medium of exchange, memory, monetary standard, money, payment system

JEL Classification: E40, E42, E49