Bitcoin: Economics, Technology, and Governance

Journal of Economic Perspectives, Vol. 29, Issue 2 - Spring 2015

Harvard Business School NOM Unit Working Paper No. 15-015

26 Pages Posted: 14 Sep 2014 Last revised: 9 May 2015

Rainer Böhme

University of Innsbruck; University of Münster - Department of Information Systems; ICSI Berkeley; TU Dresden

Nicolas Christin

Carnegie Mellon University

Benjamin G. Edelman

Harvard University - HBS Negotiations, Organizations and Markets Unit

Tyler Moore

Harvard University

Date Written: July 15, 2014

Abstract

Bitcoin is an online communication protocol that facilitates virtual currency including electronic payments. Since its inception in 2009 by an anonymous group of developers, Bitcoin has served tens of millions of transactions with total dollar value in the billions. Users have been drawn to Bitcoin for its decentralization, intentionally relying on no single server or set of servers to store transactions and also avoiding any single party that can ban certain participants or certain types of transactions. Bitcoin is of interest to economists in part for its potential to disrupt existing payment systems and perhaps monetary systems, and also for the wealth of data it provides about agents’ behavior and about the Bitcoin system itself. This article presents the platform’s design principles and properties for a non-technical audience, reviews its past, present and future uses, and points out risks and regulatory issues as Bitcoin interacts with the conventional financial system and the real economy.

Suggested Citation

Böhme, Rainer and Christin, Nicolas and Edelman, Benjamin G. and Moore, Tyler, Bitcoin: Economics, Technology, and Governance (July 15, 2014). Journal of Economic Perspectives, Vol. 29, Issue 2 - Spring 2015; Harvard Business School NOM Unit Working Paper No. 15-015. Available at SSRN: https://ssrn.com/abstract=2495572

Rainer Böhme

University of Innsbruck ( email )

Technikerstraße 21A
Innsbruck, Innsbruck 6020
Austria

HOME PAGE: http://informationsecurity.uibk.ac.at/people/rainer-boehme/

University of Münster - Department of Information Systems ( email )

Leonardo-Campus 3
Muenster, NRW D-48143
Germany

HOME PAGE: http://www.wi.uni-muenster.de/security/

ICSI Berkeley ( email )

1947 Center Street, Ste. 600
Berkeley, CA 94704
United States

TU Dresden ( email )

Dresden, 01062
Germany

Nicolas Christin

Carnegie Mellon University ( email )

Pittsburgh, PA 15213-3890
United States

Benjamin G. Edelman (Contact Author)

Harvard University - HBS Negotiations, Organizations and Markets Unit ( email )

Soldiers Field
Boston, MA 02163
United States

HOME PAGE: http://people.hbs.edu/bedelman

Tyler Moore

Harvard University ( email )

1875 Cambridge Street
Cambridge, MA 02138
United States

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