Bitcoin, Blockchain, and Distributed Ledgers: Between Hype and Reality

Abstract

Bitcoin is the most successful cryptocurrency and one of the best types of private money ever. The blockchain technology underlying bitcoin is presented with the spotlight on distributed consensus, allowing for proper understanding of its peculiarities. Notarization and trust anchoring are presented as the only relevant non-monetary blockchain applications. Finally, the hype about distributed ledger technology is assessed, evaluating its actual potential and relevance: it is exposed as an evolutionary, hardly disruptive, database technology. Instead, bitcoin can be appreciated as the equivalent of gold in digital realm: as such it might play a role in shaping the future of money and our digital civilization.

Keywords: Bitcoin, Blockchain, Distributed Ledger, DLT, Cryptocurrency, Hayek Money, Digital Gold, Gold, Consensus, Distributed Consensus, Native Digital Asset

JEL Classification: A10, B00, C70, C88, E40, E41, E42, E50, E51, E52, E58, F00, F10, G21, H00, K00, N00, O00, P00, Z00