{"id":20,"date":"2013-11-08T15:16:21","date_gmt":"2013-11-08T15:16:21","guid":{"rendered":"http:\/\/stthom.wpengine.com\/?p=20"},"modified":"2017-04-13T20:54:52","modified_gmt":"2017-04-13T20:54:52","slug":"bitcoin-as-electronic-currency","status":"publish","type":"post","link":"https:\/\/blogs.stthom.edu\/cameron\/bitcoin-as-electronic-currency\/","title":{"rendered":"Bitcoin as Electronic Currency"},"content":{"rendered":"

Exit the dollar, the euro, etc.\u00a0 Not so fast!\u00a0 Non-governmental currencies have existed before; however, an unregulated virtual currency is something new and different.\u00a0 Bitcoin is a cryptocurrency that was created in 2009 by a computer scientist known only under the pseudonym Sutoshi Nakamoto.\u00a0 Bitcoins are not held in bank accounts but in digital wallets on laptops or smartphones and can be transferred cheaply and anonymously by sending a code from the wallet of the buyer to that of the seller.<\/p>\n

The supply is determined by an algorithm that will limit the total number of coins created to 21 million (close to 12 million have been created so far).\u00a0 Scarcity means value, although value is also determined by the demand side of the market, which consists mainly of speculators, some anti-government folks and a few crooks.<\/p>\n

The value of bitcoin has been fairly low and stable at first, probably because of the lack of market participants, and then became very volatile.\u00a0 Until January 2013 its value increased slowly toward $14 (with a spike in 2011).\u00a0 It reached an all time high in March\/April of $266 coinciding with the bailout of Cypriot banks.\u00a0 Suddenly it crashed to about $80, went back up to $150, was about $110 in June and is now around $200.\u00a0 This volatility makes it the instrument of choice of speculators and gamblers whose objective is to make money by trading in and out of the market.\u00a0 It is certainly not appropriate for a buy and hold investment strategy!<\/p>\n

It has also attracted anti-government libertarians, tax dodgers, and criminals.\u00a0 In October 2013, the FBI closed Silk Road, the digital black market website used to trade illegal drugs and illicit goods and services with bitcoins. Following the raid, the price of bitcoin fell but recovered fairly quickly.\u00a0 This seems to indicate that the FBI raid caused no short-term damage and may even help to legitimize the digital money by distancing it from Silk Road illegal activities.
\nThe U.S. Federal government has also seized some of the bank accounts of Mt. Gox, the largest Bitcoin exchange.\u00a0\u00a0 Bitcoin is also accepted by a handful of real-world shops, mostly run by anti-government evangelists.\u00a0 Money transfer businesses, Western Union and Moneygram, are also said to be looking at the possibility to accept bitcoins in order to reduce the cost of sending money abroad.<\/p>\n

Several hedge funds have gotten involved and an application for the creation of an Exchange Traded Fund (ETF) replicating the performance of bitcoins has been sent to the U.S. Securities and Exchange Commission (SEC) for its approval.\u00a0 It seems as this time that the Treasury has no interest in outlawing bitcoin but only in regulating it, perhaps through the Commodities and Futures Commission (CFTC).\u00a0 However such regulations would undermine the laissez-faire philosophy based on the Austrian economic theory of Ludwig Von Mises and Friedrich Hayek that sustains bitcoin.<\/p>\n

It is doubtful whether Bitcoin will be able to survive; not only it is not commodity based and is not a fiat currency (i.e. a contract between citizens and their government), but it is socially unproductive in the sense that it provides few benefits to ecommerce, consumers, and society in general.\u00a0\u00a0 It mainly facilitates the personal gains of speculators, tax evaders, anarchists and criminals.\u00a0 It looks like we are moving toward a more regulated bitcoin market; but then will bitcoin lose its raison d\u2019\u00eatre?<\/p>\n

Pierre Canac, Ph.D.<\/a>
\nAssociate Professor of Economics<\/p>\n

See more posts by this author<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Exit the dollar, the euro, etc.\u00a0 Not so fast!\u00a0 Non-governmental currencies have existed before; however, an unregulated virtual currency is something new and different.\u00a0 Bitcoin is a cryptocurrency that was created in 2009 by a computer scientist known only under the pseudonym Sutoshi Nakamoto.\u00a0 Bitcoins are not held in bank accounts but in digital wallets…<\/p>\n","protected":false},"author":2,"featured_media":100,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[33,37,6],"tags":[14,16,18,40,30],"class_list":["post-20","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-commentary","category-csb-faculty","category-economics-economics","tag-bitcoin","tag-cryptocurrency","tag-economics-2","tag-pierre-canac","tag-sutoshi-nakamoto"],"yoast_head":"\nBitcoin as Electronic Currency - Cameron School of Business Blog<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/blogs.stthom.edu\/cameron\/bitcoin-as-electronic-currency\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Bitcoin as Electronic Currency - Cameron School of Business Blog\" \/>\n<meta property=\"og:description\" content=\"Exit the dollar, the euro, etc.\u00a0 Not so fast!\u00a0 Non-governmental currencies have existed before; however, an unregulated virtual currency is something new and different.\u00a0 Bitcoin is a cryptocurrency that was created in 2009 by a computer scientist known only under the pseudonym Sutoshi Nakamoto.\u00a0 Bitcoins are not held in bank accounts but in digital wallets…\" \/>\n<meta property=\"og:url\" content=\"https:\/\/blogs.stthom.edu\/cameron\/bitcoin-as-electronic-currency\/\" \/>\n<meta property=\"og:site_name\" content=\"Cameron School of Business Blog\" \/>\n<meta property=\"article:published_time\" content=\"2013-11-08T15:16:21+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2017-04-13T20:54:52+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/blogs.stthom.edu\/cameron\/wp-content\/uploads\/sites\/8\/2013\/11\/bitcoin_1.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"800\" \/>\n\t<meta property=\"og:image:height\" content=\"449\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Staff\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Staff\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/blogs.stthom.edu\/cameron\/bitcoin-as-electronic-currency\/\",\"url\":\"https:\/\/blogs.stthom.edu\/cameron\/bitcoin-as-electronic-currency\/\",\"name\":\"Bitcoin as Electronic Currency - Cameron School of Business Blog\",\"isPartOf\":{\"@id\":\"https:\/\/blogs.stthom.edu\/cameron\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/blogs.stthom.edu\/cameron\/bitcoin-as-electronic-currency\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/blogs.stthom.edu\/cameron\/bitcoin-as-electronic-currency\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/blogs.stthom.edu\/cameron\/wp-content\/uploads\/sites\/8\/2013\/11\/bitcoin_1.jpg\",\"datePublished\":\"2013-11-08T15:16:21+00:00\",\"dateModified\":\"2017-04-13T20:54:52+00:00\",\"author\":{\"@id\":\"https:\/\/blogs.stthom.edu\/cameron\/#\/schema\/person\/dfb342300485a4fc4c0764e55f5cde38\"},\"breadcrumb\":{\"@id\":\"https:\/\/blogs.stthom.edu\/cameron\/bitcoin-as-electronic-currency\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/blogs.stthom.edu\/cameron\/bitcoin-as-electronic-currency\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/blogs.stthom.edu\/cameron\/bitcoin-as-electronic-currency\/#primaryimage\",\"url\":\"https:\/\/blogs.stthom.edu\/cameron\/wp-content\/uploads\/sites\/8\/2013\/11\/bitcoin_1.jpg\",\"contentUrl\":\"https:\/\/blogs.stthom.edu\/cameron\/wp-content\/uploads\/sites\/8\/2013\/11\/bitcoin_1.jpg\",\"width\":800,\"height\":449,\"caption\":\"Bitcoin\"},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/blogs.stthom.edu\/cameron\/bitcoin-as-electronic-currency\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/blogs.stthom.edu\/cameron\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Bitcoin as Electronic Currency\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/blogs.stthom.edu\/cameron\/#website\",\"url\":\"https:\/\/blogs.stthom.edu\/cameron\/\",\"name\":\"Cameron School of Business Blog\",\"description\":\"CSB Blog\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/blogs.stthom.edu\/cameron\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/blogs.stthom.edu\/cameron\/#\/schema\/person\/dfb342300485a4fc4c0764e55f5cde38\",\"name\":\"Staff\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/blogs.stthom.edu\/cameron\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/9c0d0e7bc69e2e8746056469c878969fd0a01c9c4301e01df283d4a97f234b44?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/9c0d0e7bc69e2e8746056469c878969fd0a01c9c4301e01df283d4a97f234b44?s=96&d=mm&r=g\",\"caption\":\"Staff\"},\"description\":\"The University of St. Thomas is the only Catholic, liberal arts university in Houston, Texas. We have 35+ undergraduate majors including STEM, Nursing, Business, Education and Pre-Med. Located in a vibrant urban environment just minutes from downtown and the famed Texas Medical Center, we welcome students of all races and religions to our diverse and collaborative campus.\",\"url\":\"https:\/\/blogs.stthom.edu\/cameron\/author\/stthomashouston\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Bitcoin as Electronic Currency - Cameron School of Business Blog","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/blogs.stthom.edu\/cameron\/bitcoin-as-electronic-currency\/","og_locale":"en_US","og_type":"article","og_title":"Bitcoin as Electronic Currency - Cameron School of Business Blog","og_description":"Exit the dollar, the euro, etc.\u00a0 Not so fast!\u00a0 Non-governmental currencies have existed before; however, an unregulated virtual currency is something new and different.\u00a0 Bitcoin is a cryptocurrency that was created in 2009 by a computer scientist known only under the pseudonym Sutoshi Nakamoto.\u00a0 Bitcoins are not held in bank accounts but in digital wallets…","og_url":"https:\/\/blogs.stthom.edu\/cameron\/bitcoin-as-electronic-currency\/","og_site_name":"Cameron School of Business Blog","article_published_time":"2013-11-08T15:16:21+00:00","article_modified_time":"2017-04-13T20:54:52+00:00","og_image":[{"width":800,"height":449,"url":"https:\/\/blogs.stthom.edu\/cameron\/wp-content\/uploads\/sites\/8\/2013\/11\/bitcoin_1.jpg","type":"image\/jpeg"}],"author":"Staff","twitter_card":"summary_large_image","twitter_misc":{"Written by":"Staff","Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/blogs.stthom.edu\/cameron\/bitcoin-as-electronic-currency\/","url":"https:\/\/blogs.stthom.edu\/cameron\/bitcoin-as-electronic-currency\/","name":"Bitcoin as Electronic Currency - Cameron School of Business Blog","isPartOf":{"@id":"https:\/\/blogs.stthom.edu\/cameron\/#website"},"primaryImageOfPage":{"@id":"https:\/\/blogs.stthom.edu\/cameron\/bitcoin-as-electronic-currency\/#primaryimage"},"image":{"@id":"https:\/\/blogs.stthom.edu\/cameron\/bitcoin-as-electronic-currency\/#primaryimage"},"thumbnailUrl":"https:\/\/blogs.stthom.edu\/cameron\/wp-content\/uploads\/sites\/8\/2013\/11\/bitcoin_1.jpg","datePublished":"2013-11-08T15:16:21+00:00","dateModified":"2017-04-13T20:54:52+00:00","author":{"@id":"https:\/\/blogs.stthom.edu\/cameron\/#\/schema\/person\/dfb342300485a4fc4c0764e55f5cde38"},"breadcrumb":{"@id":"https:\/\/blogs.stthom.edu\/cameron\/bitcoin-as-electronic-currency\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/blogs.stthom.edu\/cameron\/bitcoin-as-electronic-currency\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/blogs.stthom.edu\/cameron\/bitcoin-as-electronic-currency\/#primaryimage","url":"https:\/\/blogs.stthom.edu\/cameron\/wp-content\/uploads\/sites\/8\/2013\/11\/bitcoin_1.jpg","contentUrl":"https:\/\/blogs.stthom.edu\/cameron\/wp-content\/uploads\/sites\/8\/2013\/11\/bitcoin_1.jpg","width":800,"height":449,"caption":"Bitcoin"},{"@type":"BreadcrumbList","@id":"https:\/\/blogs.stthom.edu\/cameron\/bitcoin-as-electronic-currency\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/blogs.stthom.edu\/cameron\/"},{"@type":"ListItem","position":2,"name":"Bitcoin as Electronic Currency"}]},{"@type":"WebSite","@id":"https:\/\/blogs.stthom.edu\/cameron\/#website","url":"https:\/\/blogs.stthom.edu\/cameron\/","name":"Cameron School of Business Blog","description":"CSB Blog","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/blogs.stthom.edu\/cameron\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/blogs.stthom.edu\/cameron\/#\/schema\/person\/dfb342300485a4fc4c0764e55f5cde38","name":"Staff","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/blogs.stthom.edu\/cameron\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/9c0d0e7bc69e2e8746056469c878969fd0a01c9c4301e01df283d4a97f234b44?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/9c0d0e7bc69e2e8746056469c878969fd0a01c9c4301e01df283d4a97f234b44?s=96&d=mm&r=g","caption":"Staff"},"description":"The University of St. Thomas is the only Catholic, liberal arts university in Houston, Texas. We have 35+ undergraduate majors including STEM, Nursing, Business, Education and Pre-Med. Located in a vibrant urban environment just minutes from downtown and the famed Texas Medical Center, we welcome students of all races and religions to our diverse and collaborative campus.","url":"https:\/\/blogs.stthom.edu\/cameron\/author\/stthomashouston\/"}]}},"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"https:\/\/blogs.stthom.edu\/cameron\/wp-content\/uploads\/sites\/8\/2013\/11\/bitcoin_1.jpg","_links":{"self":[{"href":"https:\/\/blogs.stthom.edu\/cameron\/wp-json\/wp\/v2\/posts\/20","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.stthom.edu\/cameron\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.stthom.edu\/cameron\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.stthom.edu\/cameron\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.stthom.edu\/cameron\/wp-json\/wp\/v2\/comments?post=20"}],"version-history":[{"count":0,"href":"https:\/\/blogs.stthom.edu\/cameron\/wp-json\/wp\/v2\/posts\/20\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blogs.stthom.edu\/cameron\/wp-json\/wp\/v2\/media\/100"}],"wp:attachment":[{"href":"https:\/\/blogs.stthom.edu\/cameron\/wp-json\/wp\/v2\/media?parent=20"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.stthom.edu\/cameron\/wp-json\/wp\/v2\/categories?post=20"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.stthom.edu\/cameron\/wp-json\/wp\/v2\/tags?post=20"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}