Getting Off the Ground: The Case of Bitcoin
30 Pages Posted: 8 Aug 2017 Last revised: 6 Jun 2018
Date Written: January 2, 2018
Abstract
By declaring an item legal tender or making it publicly receivable, governments might generate sufficient demand to determine the medium of exchange. How do private actors launch a new currency? There are two views in the literature. The first requires offering an item with use value to some agents distinct from its role as a medium of exchange. The second suggests agents might coordinate on an intrinsically useless item. With these views in mind, I survey the logs from the original bitcoin forum, bitcoin-list. I find that early participants in the bitcoin community understood the importance of coordination and took steps to coordinate users.
Keywords: bitcoin, coordination, cryptocurrency, currency, demand for money, intrinsic worth, launch, money, use-value
JEL Classification: E40, E41, E42
Suggested Citation: Suggested Citation