Getting off the ground: the case of bitcoin

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 money? There are two views in the literature. The first requires offering an item with a use value to some agents that is distinct from its role as a medium of exchange. The second suggests that 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.

Money Mining and Price Dynamics

“…We represent inequality (14) in Figure 5. The left side is linear in A while the right side is quadratic with two roots, A = A and A = .…”

“…Value of money The steady-state equilibrium is determined recursively. First, A s is obtained as the smallest solution to (14). Given A = A s , q s exists if and only if r < ( A s )=( 1) by ( 13) or, equivalently,…”

“…For any (A; q) such A = (q), the right side rises in m because the expression in the braces is negative by (14) and (10). Using that the left side of (62) coincides with (63) when m = 1 A, it follows that if (62) holds strictly at (q 0 ; A 0 ), then the measure of miners m implied by the trajectory A = (q) must strictly exceed 1 A 0 , and thus it cannot be an equilibrium path.…”

Digitization and the Evolution of Money as a Social Technology of Account

“…52 "Bitcoin's design is built for a world where individuals can trust neither institutions nor each other. Such a world is very costly, because trust in institutions must be substituted by precautionary measures against potential abuse on the individual and systemic level"(Weber, 2018, p. 115).53Kocherlakota (1998a,b) models money as a societal memory of transactions, a record-keeping device to maintain balances Luther (2019). further elaborates the role of collective coordination in establishing particular devices.54 Luther and Olson (2014, p. 24) call the system "quasi-anonymous," or "anonymity through obscurity," since a "user's key does not contain any personally traceable information in and of itself."…”

Digitization and the evolution of money as a social technology of account

“…Kocherlakota [51,52] предлагает модель денег как общественной памяти сделок, средство учета для ведения балансов. Luther[53] представляет дальнейшее развитие роли коллективной координации в разработке отдельных инструментов.…”