Future of Money and
Implications on Monetary Policy
S Summary of article
S Emergence of Bitcoin
S What is Bitcoin?
S Advantages and Disadvantages
S Effect on Monetary Policy
S Compare to Europe
Summary of Article
S Economic collapse of Cyprus showed huge jump in
S 13,438,550 Bitcoin in circulation
S Decentralized general ledger
S Will always be able to use if internet is on
S Bitcoin thrives in a world without trust
Emergence of Bitcoin
S August 2008 Bitcoin.org is registered
S Double spending
S January 2009 “Genesis Block”
S October 2009 first exchange rate posted
S First traded publicly in 2010
S 2011 Mt. Gox user table hacked
S 2012 started major overhaul
S October 2012 European Central Bank stated opinion
S October 2013 First ATM opens up
What is Bitcoin?
S Virtual Currency
S Transactions vs. Investments
S No Taxes
S No Tracking of Transactions
S No Transaction Costs
S Cannot be Stolen
S No Reversal of Transaction
S Not Widely Accepted
S “Wallets” can be Lost
S Fluctuating Value
S No Buyer Protection
S Risk of Technological Error
P AD1 AD2 LRAS
A B SRAS
Monetary policy in Europe
S “The entire Eurozone is close to recession, again, and
deflation, a general deflation, is a real possibility. Interest rates
are near zero, we’re at that zero monetary bound. So we can’t
slash interest rates to get the economy moving again. We can’t
use fiscal policy either. Partly because everyone’s deficits are
at or above what the euro system allows them to be, partly
because those who most need to borrow to expand simply
cannot borrow at present. Greece, even after the private sector
creditors took a 70% haircut, still has debt well north of 100% of
GDP and, as above, would pay near 9% to raise more.”
S USD vs Bitcoin
S Regulation/effects on currencies
S Other cryptocurrencies
S Consumption and use of bitcoin
S General problems with use
USD vs Bitcoin
S 1 Bitcoin is equal to 347.96 dollars
S Most countries have no regulation on Bitcoin
S No legislation
S Or even recognize it as a legal tender
S Effects on currency
S General Problems of bitcoin
-Has the potential to be extremely volatile
-Establishments that accept it
S Do people accept it as a currency?
S How has the market reacted to Bitcoin?
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S Narvasa, Helen, and Heather Morton. "The Emergence of Bitcoin." The Emergence of
Bitcoin. NCSL, n.d. Web. 26 Oct. 2014.
S Rüdiger Koch, Rüdiger. "Bitcoin - a Means for Redistribution of Wealth." Bitcoin - a Means
for Redistribution of Wealth. N.p., n.d. Web. 25 Oct. 2014.
S Worstall, Tom. "Europe Doesn't Have A Debt Crisis, Europe Has A Monetary
Crisis." Forbes. Forbes Magazine, n.d. Web. 25 Oct. 2014.