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The Role of Bitcoin in the Monetary System: Its Development and the Possible Future

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Contemporary Issues in International Political Economy

Abstract

Bitcoin has received increasing attention since its introduction and has a market capitalization of over US$100 billion now. Bitcoin is not simply a digital currency, which mainly improves the ease of transportation by turning it from tangible to intangible money. Instead, Bitcoin comes with a breakthrough in removing record-keeping by central authorities. It provides a strong mechanism to support a credibly committed rule-based monetary system, which can avoid double-spending. The presence of such mechanism, in turn, makes a resurgence of private provision of money more feasible. In this regard, Bitcoin can reshape the world economy through a substantial revamp in the monetary system. The purpose of this chapter is to shed light on the current development of Bitcoin as a medium of exchange and its possible future role in the monetary system.

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Notes

  1. 1.

    Sargent and Velde (2014).

  2. 2.

    “Bitcoin and Bubbles”, The Grumpy Economist, John Cochrane’s blog (access 17 August 2018).

  3. 3.

    For a detailed review of the free banking experience in Scotland, see White (2002).

  4. 4.

    “Watching Bitcoin, Dogecoin, etc.…”, Grasping Reality with Both Hands: Bradford-delong.com; http://www.bradford-delong.com/; access 9 July 2018.

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Authors and Affiliations

  1. Department of Economics, Hong Kong Baptist University, Kowloon, Hong Kong

    Aries Kin Ming Wong

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  1. Aries Kin Ming Wong
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Correspondence to Aries Kin Ming Wong .

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Editors and Affiliations

  1. Hong Kong Shue Yan University, North Point, Hong Kong

    Fu-Lai Tony Yu

  2. The Chinese University of Hong Kong, Shatin, Hong Kong

    Diana S. Kwan

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Wong, A.K.M. (2019). The Role of Bitcoin in the Monetary System: Its Development and the Possible Future. In: Yu, FL.T., Kwan, D.S. (eds) Contemporary Issues in International Political Economy. Palgrave Macmillan, Singapore. https://doi.org/10.1007/978-981-13-6462-4_17

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