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Spring 2018

ISSN 0890-913X

Volume 33, Number 1

Is Bitcoin Intrinsically Worthless?

William J. Luther, Florida Atlantic Univeristy

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IsBitcoinIntrinsicallyWorthless?TheJournalofPrivateEnterprise33(1),2018,31–45WilliamJ.LutherKenyonCollege______________________________________________________AbstractMoniesaretypicallycategorizedascommodityorfiat,dependingonwhetherthemoneyinquestionisintrinsicallyworthless.Inthecaseofbitcoin,itscategoryisnotclear.Iconsiderthesuperficialsubjectivevalueargumentoftenputforwardbynonmonetaryeconomistsandamoresophisticatedpaymentstechnologyargument.Afterdismissingboth,Iarguethattherearetworeasonableviewsonthevalueofbitcoin.Onemightclaimbitcoinlacksintrinsicworth,inwhichcaseitsvaluedependsonforesightandcoordination.Alternatively,onemightclaimthatbitcoinhasintrinsicworth,evenifnooneelseacceptsit,becausesomeusershavepeculiarpreferences.Ineithercase,bitcoin’sexistencecallsintoquestionthepracticalrelevanceoftheregressiontheorem.______________________________________________________JELCodes:B53,E40,E41,E42Keywords:bitcoin,cryptocurrency,intrinsicworth,money,payment,paymentsystemI.IntroductionMoniesaretypicallycategorizedascommodityorfiat.Inthecaseofbitcoin,itscategoryisnotsoclear.Somemaintainthatbitcoinisacommoditymoney(e.g.,Graf2013a,2013b;Surda2014).1Othersclaimitisa(private)fiatmoney(e.g.,Velde2013;Sieroń2013).Selgin(2015)goessofarastoconstructanewclassificationschemealtogether,whereinbitcoinisdescribedasasyntheticcommoditymoney.21Surda’s(2014,p.22)position,thatbitcoinisacommoditymoney,doesnotfollowifhisassertionthatthe“utilityofBitcoinisderivedfromareductionoftransactioncostsofexchange”ismeanttobeexclusive.Ifbitcoinhasnoutilityapartfromitsroleinreducingtransactioncostsasamediumofexchange,itisnotacommoditymoney.2Selgin(2015)describesitemswithsomenonmonetaryuseandabsolutescarcityascommoditymonies;withnononmonetaryuseandcontingentscarcityasfiatmonies;withnononmonetaryuseandabsolutescarcityassyntheticcommoditymonies;andwithsomenonmonetaryuseandcontingentscarcityasCoasedurablemonies.

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Title	Is Bitcoin Intrinsically Worthless?
Authors/Creators:	William J. Luther, Florida Atlantic Univeristy
Year:	2018
Volume:	33
Number:	1
Pages:	31 - 45
Publisher:	The Association of Private Enterprise Education
ISSN:	0890-913X
Document Type:	Articles
Keywords:	bitcoin, cryptocurrency, intrinsic worth, money, payment, payment system

Citation:
Luther, William J. / 2018. "Is Bitcoin Intrinsically Worthless?." The Journal of Private Enterprise, 33(1): 31-45.