Psychology explains why your friends can't shut up about bitcoin

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The bitcoin is the new fashion. To evaluate a currency or a candidate for currency, the first thing you have to do is ask if it is the economist explains bitcoin price money or not. That is, if it is used the economist explains bitcoin price in transactions. For this to happen, the more people who accept it as a means of payment because they trust that others are going to accept it, the better — the first appearance of the Nash The economist explains bitcoin price in this blog.

From a global point of view, the U. Yet it is true that, from a more local point of view in the eurozone, the euro is clearly a the economist explains bitcoin price means of payment than the U. First, a bit of theory. The history of money is the history of technological innovation that has the ultimate goal of improving three functions of money: The function of the means of payment of the currency improves when transaction costs decrease. And the contribution of credit cards is not so clear because when losing anonymity and requiring a third party — the banking entity that issues the card or Visa — to guarantee payment, transaction costs become greater than those of paper currency.

The function of the deposit value of money improves when the value of the money becomes more stable. That is, when money is exchanged for goods at a stable price, without inflation or deflation, and when ownership costs go down and money becomes more secure. Recall, for instance, in the mids when at some gas stations in Minneapolis the price of gas varied if you paid in cash or with a credit card.

This price difference redefined the account unit. And, in respect to money security, one could argue that since they are nominative, credit cards represent an improvement over paper money.

And now about the bitcoin. Is it a good currency? Right now, it is probably better than zoquitosbut it is certainly a worse currency than U. And in the future? At the moment, Graphic 1, which I have taken from the second article in The Economistshows that prices in bitcoins are not very stable. What advantages does the bitcoin have? Supposedly, its transaction costs are less than those of any other means of payment. This assertion, however, the economist explains bitcoin price be qualified because networked computers take about 10 minutes to confirm the the economist explains bitcoin price of transactions.

For some, another advantage is that the bitcoin is a means of payment among equals peer-to-peerwhich the economist explains bitcoin price that government intervention is unnecessary. What drawbacks does this have? Like gold, it is costly to produce. Even though to acquire bitcoins, instead of excavating, you have to resolve mathematical problems. And that its availability is supposedly limited, which makes permanent deflation inevitable when approaching the limit.

Of course, this problem has the hidden advantage that central banks cannot raise taxes imposed every time emission increases. In a globalized economy, real and virtual money compete and will continue competing against each other. And it is likely that we will use currencies in diverse forms in the not-so-distant future.

I, for example, keep waiting for the day that we have a means of payment that makes it feasible for readers to pay me one euro cent for this blog post — but only those of you who liked it, of course.

His recent work explores the macroeconomic consequences of fiscal policy and pension system reforms. He has published the results of the economist explains bitcoin price research in some of the leading professional journals such as the Journal of Political The economist explains bitcoin price and the Journal of Monetary Economics.

It is the first time that I have heard this! Thank you for the article and for the links, they have been very useful to obtain more information. And congratulations for the blog! Bitcoin bubbled to dollars but is now stable atMost people keep saying its to unstable but I believe its a great investment. Skip to content Others. The bitcoin The bitcoin is the new fashion. The bitcoin exchange rate. The Economist And now about the bitcoin. About Javier Diaz-Gimenez Prof.

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