Getting Off the Ground: The Case of Bitcoin
30 Pages Posted: 8 Aug 2017 Last revised: 6 Jun 2018
Date Written: January 2, 2018
By declaring an item legal tender or making it publicly receivable, governments might generate sufficient demand to determine the medium of exchange. How do private actors launch a new currency? There are two views in the literature. The first requires offering an item with use value to some agents distinct from its role as a medium of exchange. The second suggests agents might coordinate on an intrinsically useless item. With these views in mind, I survey the logs from the original bitcoin forum, bitcoin-list. I find that early participants in the bitcoin community understood the importance of coordination and took steps to coordinate users.
Keywords: bitcoin, coordination, cryptocurrency, currency, demand for money, intrinsic worth, launch, money, use-value
JEL Classification: E40, E41, E42
Suggested Citation: Suggested Citation