Bitcoin – Currency or Asset?

21 Pages Posted: 22 Feb 2016

See all articles by Dirk G. Baur

Dirk G. Baur

University of Western Australia - Business School; Financial Research Network (FIRN)

KiHoon Jimmy Hong

Hongik University

Adrian D. Lee

Deakin University - Department of Finance (Property and Real Estate)

Date Written: November 2015


Bitcoin is defined as digital money within a decentralized peer-to-peer payment network. It is a hybrid between fiat currency and commodity currency without intrinsic value and independent of any government or monetary authority. This paper analyses the question of whether bitcoin is a currency or an asset and, more specifically, what is its current usage and what usage will prevail in the future, given its characteristics? We analyse the statistical properties of bitcoin and find that it is essentially uncorrelated with traditional asset classes such as stocks, bonds and commodities, both in normal times and in periods of financial turmoil. The analysis of transaction data of bitcoin accounts shows that bitcoins are mainly used as a speculative investment and not as an alternative currency and medium of exchange. Bitcoin is still small relative to the size of other asset classes and, thus, does not pose an immediate risk for monetary, financial or economic stability.

Suggested Citation

Baur, Dirk G. and Hong, KiHoon Jimmy and Lee, Adrian D., Bitcoin – Currency or Asset? (November 2015). Melbourne Business School, 2016 Financial Institutions, Regulation & Corporate Governance (FIRCG) Conference, Available at SSRN:

Dirk G. Baur

University of Western Australia - Business School ( email )

School of Business
35 Stirling Highway
Crawley, Western Australia 6009

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane


KiHoon Jimmy Hong

Hongik University ( email )

Seoul, Seoul 121
Korea, Republic of (South Korea)

Adrian D. Lee (Contact Author)

Deakin University - Department of Finance (Property and Real Estate) ( email )

70 Elgar Road
Melbourne, VIC 3125

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