Is Bitcoin the Money of the Future?

Social Education, Vol. 79, No. 2, March/April 2015

Posted: 18 Apr 2016

See all articles by Ashley Harrison

Ashley Harrison

Center for Economic Education

M. Scott Niederjohn


J. R. Clark

The University of Tennessee at Chattanooga

Date Written: March 15, 2015


Economists define money as anything that is generally accepted in payment for goods and services or in the repayment of debts.1 Paper money and coins clearly fit this definition, but deposits in checking accounts are so widely accepted that they are also considered in the narrowest definition of money used by the Federal Reserve, called “M1.” M1 is the sum of all currency, checkable deposits, and travelers checks. How about savings accounts? These amounts are so quickly convertible into M1 that many economists consider them money too, part of a larger total called M2 that includes all of M1 plus all small denomination time deposits (bank CDs), savings accounts, and money market account balances. M2 then represents a form of money that is less “liquid” (less easily converted and spent) than M1.

In addition to this definition, money is expected to satisfy three functions: serve as a medium of exchange, a store of value, and a unit of account. In this article, we will explore what Bitcoin is and why it has been so prevalent in the news of late. Further, we will apply the three functions of money to Bitcoin and discuss whether it should be considered a form of money. Some of the benefits and problems associated with Bitcoin will be discussed along with its future potential.

Suggested Citation

Harrison, Ashley and Niederjohn, M. Scott and Clark, Jeff R., Is Bitcoin the Money of the Future? (March 15, 2015). Social Education, Vol. 79, No. 2, March/April 2015 . Available at SSRN:

Ashley Harrison (Contact Author)

Center for Economic Education ( email )

United States

M. Scott Niederjohn


No Address Available

Jeff R. Clark

The University of Tennessee at Chattanooga ( email )

Department of Economics
Suite 313 Fletcher Hall
Chattanooga, TN 37403-2598
United States

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