Can Bitcoin Become Money? The Monetary Rule Problem

21 Pages Posted: 23 Feb 2018 Last revised: 29 Feb 2020

See all articles by Nicolas Cachanosky

Nicolas Cachanosky

Metropolitan State University of Denver; American Institute for Economic Research

Multiple version iconThere are 2 versions of this paper

Date Written: July 25, 2019


The growing literature on Bitcoin can be divided in two groups. One performs an economic analysis of Bitcoin focusing on its monetary characteristics. The other one looks takes a financial look at the price of Bitcoin. Interestingly, both of these groups have not given much more than passing comments to the problem whether or not Bitcoin has the right monetary rule. This paper argues that Bitcoin in particular, and cryptocurrencies in general, do not have a good monetary rule, and that this shortcoming seriously limits its prospect of becoming a well-established currency.

Keywords: bitcoin, monetary rules, nominal income targeting

JEL Classification: E42, E51

Suggested Citation

Cachanosky, Nicolas, Can Bitcoin Become Money? The Monetary Rule Problem (July 25, 2019). 2019. Australian Economic Papers, Vol. 58, No. 4, pp. 365-374, Available at SSRN: or

Nicolas Cachanosky (Contact Author)

Metropolitan State University of Denver ( email )

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