Realized Bitcoin Volatility
40 Pages Posted: 11 Apr 2017
Date Written: April 10, 2017
Abstract
Bitcoin is a digital currency and designed to have typical functions of a currency such as being a medium of exchange, a unit of account and a store of value. Each of these functions is adversely affected by the volatility of the currency. If a currency exhibits extreme fluctuations, its usage as a currency is limited. By means of an in-depth analysis of Bitcoin realized volatility, we show that the volatility of Bitcoin is extreme (up to 30 times larger) compared to the major currencies US dollar, the euro and the Japanese yen. The findings imply that Bitcoin cannot function as a currency.
Keywords: Bitcoin, digital currency, medium of exchange, realized volatility
JEL Classification: C58, E44, F31
Suggested Citation: Suggested Citation
Financial Research Network (FIRN)
C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia
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