Title: The digital agenda of virtual currencies: Can BitCoin become a global currency?
Authors: CIAIAN PAVELRAJCANIOVA MIROSLAVAKANCS D'ARTIS
Citation: INFORMATION SYSTEMS AND E-BUSINESS MANAGEMENT vol. 14 p. 883-919
Publisher: SPRINGER HEIDELBERG
Publication Year: 2016
JRC N°: JRC99553
ISSN: 1617-9846
URI: http://link.springer.com/article/10.1007/s10257-016-0304-0
http://publications.jrc.ec.europa.eu/repository/handle/JRC99553
DOI: 10.1007/s10257-016-0304-0
Type: Articles in periodicals and books
Abstract: This paper identifies and analyzes BitCoin features which may facilitate BitCoin to become a global currency, as well as characteristics which may impede the use of BitCoin as a medium of exchange, a unit of account and a store of value, and compares BitCoin with standard currencies with respect to the main functions of money. Among all analyzed BitCoin features, the extreme price volatility stands out most clearly compared to standard currencies. In order to understand the reasons for such extreme price volatility, we attempt to identify drivers of BitCoin price formation and estimate their importance econometrically. We apply time-series analytical mechanisms to daily data for the 2009–2014 period. Our estimation results suggest that BitCoin attractiveness indicators are the strongest drivers of BitCoin price followed by market forces. In contrast, macro-financial developments do not determine BitCoin price in the long-run. Our findings suggest that as long as Bit-Coin price will be mainly driven by speculative investments, BitCoin will not be able to compete with standard currencies.
JRC Directorate:Joint Research Centre Corporate Activities

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