Bitcoin: Unlicensed Gambling

Promoters claim that bitcoin is a new type of money, reduces transactions costs by abandoning intermediaries and will become a safe asset that they call “digital gold”. In this book, we dissect these claims and explain what bitcoin really is. Economic theory states that money should reduce transaction costs for payments, loans, and relative valuations, which requires a stable value. We show that the extreme price volatility and the high transaction costs – especially the time component – make bitcoin almost useless as money. Bitcoin increases, instead of reduces, transactions costs. Furthermore, an intermediary exists – the miner – who charges a transaction fee.