Argument by False Analogy: The Mistaken Classification of Bitcoin as Token Money

28 Pages Posted: 17 Dec 2018 Last revised: 29 Feb 2020

See all articles by Alistair Milne

Alistair Milne

Loughborough University - School of Business and Economics

Date Written: November 25, 2018

Abstract

This paper challenges widespread preconceptions about cryptocurrencies and other crypto assets. They are not monetary tokens or objects but accounting entries (like deposit money and custodian bank security accounts). Their innovation is not ‘decentralisation’ but use of single (rather than multiple) ledgers; automated secure transfer; and potential anonymity. This has practical implications: (i) crypto assets require no new framework of law and regulation with AML rules applying directly to crypto institutions (ii) ‘CBDC’ or central bank account money already exists, the policy issues are (a) who may directly or indirectly hold central bank accounts? (b) what mechanisms should identify holders?

Keywords: bank payments, bank reserves, blockchain, central banking, central bank digital currency, closed money, cryptocurrency, cryptography, distributed ledgers, electronic currency, fiduciary money, financial regulation, financial technology, initial coin offering, monetary nominalism, monetary technology

JEL Classification: B53, E42, G21

Suggested Citation

Milne, Alistair K. L., Argument by False Analogy: The Mistaken Classification of Bitcoin as Token Money (November 25, 2018). Available at SSRN: https://ssrn.com/abstract=3290325 or http://dx.doi.org/10.2139/ssrn.3290325

Alistair K. L. Milne (Contact Author)

Loughborough University - School of Business and Economics ( email )

Epinal Way
Loughborough
Leicestershire, LE11 3TU
United Kingdom

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