Is Bitcoin Money? (And What that Means)

Abstract

In a recent article, Yermack (2015) argues that bitcoin is not money because it functions poorly as a medium of exchange, unit of account, and store of value. We offer a more conventional view. We maintain that the standard approach classifies an item as money if and only if it functions as a commonly-accepted medium of exchange. Then, we show that the demand for bitcoin is comparable to the demand for many government-issued monies. Finally, we argue that bitcoin is money — though perhaps only over a relatively small domain at present.

Keywords: Bitcoin, Medium of Exchange, Money, Store of Value, Unit of Account

JEL Classification: E40, E41, E42