Abstract
Bitcoin got increasing popularity and was considered by the public as a great investment due to huge overvaluation in 2017. In parallel, economists and high-level technicians started to advocate the use of bitcoin and other cryptographic currencies as an alternative to national currencies. However, bitcoin is far from being considered as money, so it is hard for a monetary and payment system to emerge based on these technologies. This paper, apart from briefly presenting the Bitcoin System, shows why bitcoin is not money in the light of the Keynesian theory. We use Keynesian essential properties of Money and Modern Money Theory to define money, and to show that cryptographic currencies are not money. We then go back to Keynes' theory of portfolio choice, established in Chapter 17 of the General Theory, to show what bitcoin really is: at most, bitcoin is a perfect virtual commodity, a virtual liquid speculative asset.
Highlights
Introduction“everyone can create money; the problem is to get it accepted” Hyman p
Bitcoin got increasing popularity and was considered by the public as a great investment due to huge overvaluation in 2017
This paper aims to use a Keynesian view of money to show that bitcoin is not money and so, a global monetary and payment system can hardly be established based on bitcoin
Summary
“everyone can create money; the problem is to get it accepted” Hyman p. We use what Keynes and the Post-Keynesians define as essential properties of money in a monetary production economy. MMT is based on many authors» contribution, including Keynes, so it is post-Keynesian, but it is even much more With this framework we can understand why bitcoin is not money. We divided this section into three: the fundamental characteristics of the conceptual framework Keynes developed, and how money is important in it; the original Keynesian and PostKeynesian essential properties of money in a monetary production economy and the Modern Money Theory approach; and the third section shows a contrast between what characterizes money in the Post-Keynesian approach of the second section and what we have seen how bitcoin is characterized in the first section. Final remarks come after the third section with some openness for future works
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