Economics of bitcoin

Bitcoin was designed by its inventor, Satoshi Nakamoto, to work as a currency.{{cite web |last=Nakamoto |first=Satoshi |date=October 2008 |title=Bitcoin: A Peer-to-Peer Electronic Cash System |url=https://bitcoin.org/bitcoin.pdf |url-status=dead |archive-url=https://web.archive.org/web/20100704213649/https://bitcoin.org/bitcoin.pdf |archive-date=4 July 2010 |access-date=28 April 2014 |publisher=bitcoin.org}}{{cite news |url=http://www.economist.com/node/21563752 |title=Monetarists Anonymous|newspaper=The Economist|date=29 September 2012 |access-date=21 October 2013}} It is commonly referred to with terms like: digital currency,{{cite web |url=http://mercatus.org/sites/default/files/Brito_BitcoinPrimer.pdf |title=Bitcoin: A Primer for Policymakers |publisher=George Mason University |work=Mercatus Center |year=2013 |access-date=22 October 2013 |author1=Jerry Brito |author2=Andrea Castillo |name-list-style=amp |archive-date=21 September 2013 |archive-url=https://web.archive.org/web/20130921060724/http://mercatus.org/sites/default/files/Brito_BitcoinPrimer.pdf |url-status=dead }}{{rp|1}} digital cash,{{cite news |url=https://www.nytimes.com/2013/08/01/technology/personaltech/virtual-currency-gains-ground-in-actual-world.html |title=Virtual Currency Gains Ground in Actual World |work=The New York Times |date=31 July 2013 |access-date=6 May 2014 |author=Murphy, Kate |quote=A type of digital cash, bitcoins were invented in 2009 and can be sent directly to anyone, anywhere in the world.}} virtual currency,{{cite web |title=Cracking the Bitcoin: Digging Into a $131M USD Virtual Currency |url=http://www.dailytech.com/Cracking+the+Bitcoin+Digging+Into+a+131M+USD+Virtual+Currency/article21878.htm |author=Jason Mick |publisher=Daily Tech |date=12 June 2011 |access-date=30 September 2012 |archive-url=https://archive.today/20130120051306/http://www.dailytech.com/Cracking+the+Bitcoin+Digging+Into+a+131M+USD+Virtual+Currency/article21878.htm |archive-date=20 January 2013 |url-status=dead }} electronic currency,{{cite magazine |url=https://www.newyorker.com/online/blogs/elements/2013/04/the-future-of-bitcoin.html |title=The Bitcoin Boom |publisher=Condé Nast |magazine=The New Yorker|date=2 April 2013 |access-date=22 December 2013 |author=Bustillos, Maria |quote=Standards vary, but there seems to be a consensus forming around Bitcoin, capitalized, for the system, the software, and the network it runs on, and bitcoin, lowercase, for the currency itself.}} digital gold,{{cite news|last1=Usborne|first1=Simon|title=Digital gold: why hackers love Bitcoin|url=https://www.theguardian.com/technology/2017/may/15/digital-gold-why-hackers-love-bitcoin-ransomware|access-date=8 July 2017|work=The Guardian|date=15 May 2017}} or cryptocurrency.{{efn|The adjectives digital, electronic or virtual describe the form. In securities, the analogical form has been described as book entry, paperless, digital, electronic, uncertificated or dematerialized.}}

The question whether bitcoin is a currency or not is disputed. Bitcoins have three useful qualities in a currency, according to The Economist in January 2015: they are "hard to earn, limited in supply and easy to verify".{{cite news |title=The magic of mining |url=https://www.economist.com/news/business/21638124-minting-digital-currency-has-become-big-ruthlessly-competitive-business-magic |access-date=13 January 2015 |newspaper=The Economist |date=13 January 2015}} Economists define money as a store of value, a medium of exchange and a unit of account, and agree that bitcoin has some way to go to meet all these criteria. It does best as a medium of exchange: for at least the period March 2014 to July 2023 the bitcoin market suffered from volatility,{{Cite web |date=2023-08-01 |title=Bitcoin turns less volatile than S&P 500, tech stocks and gold |url=https://www.afr.com/markets/currencies/bitcoin-turns-less-volatile-than-s-and-p-500-tech-stocks-and-gold-20230802-p5dt4q |access-date=2023-08-02 |website=Australian Financial Review |language=en}} limiting the ability of bitcoin to act as a stable store of value, and retailers accepting bitcoin use other currencies as their principal unit of account.{{cite news |title=Free Exchange. Money from nothing. Chronic deflation may keep Bitcoin from displacing its rivals. |url=https://www.economist.com/news/finance-and-economics/21599053-chronic-deflation-may-keep-bitcoin-displacing-its-fiat-rivals-money |access-date=25 March 2014 |newspaper=The Economist |date=15 March 2014}}

Classification of bitcoin by the United States government is to date unclear with multiple conflicting rulings. In 2013 Judge Amos L. Mazzant III of the United States District Court for the Eastern District of Texas stated that "Bitcoin is a currency or form of money".{{cite news|last1=Hill|first1=Kashmir|title=Federal Judge Rules Bitcoin Is Real Money|url=https://www.forbes.com/sites/kashmirhill/2013/08/07/federal-judge-rules-bitcoin-is-real-money/#20b2720a4fba|access-date=3 January 2017|work=Forbes|date=7 August 2013}} In July 2016, Judge Teresa Mary Pooler of the Eleventh Judicial Circuit Court of Florida cleared Michell Espinoza in State of Florida v. Espinoza in money-laundering charges he faced involving his use of bitcoin. Judge Pooler stated "Bitcoin may have some attributes in common with what we commonly refer to as money, but differ in many important aspects, they are certainly not tangible wealth and cannot be hidden under a mattress like cash and gold bars."{{cite news |last1=Hurtado |first1=Patricia|title=Florida State Judge Rules Bitcoin Doesn't Qualify as Money |url=https://www.bloomberg.com/news/articles/2016-07-25/florida-state-judge-rules-bitcoin-doesn-t-qualify-as-money |access-date=31 December 2016 |publisher=Bloomberg L.P.|date=26 July 2016}} In September 2016, a ruling by Judge Alison J. Nathan of United States District Court for the Southern District of New York contradicted the Florida Espinoza ruling stating "Bitcoins are funds within the plain meaning of that term.— Bitcoins can be accepted as a payment for goods and services or bought directly from an exchange with a bank account. They therefore function as pecuniary resources and are used as a medium of exchange and a means of payment."{{Cite news|title=Bitcoin is money, US judge says in case tied to JPMorgan hack|url=https://www.cnbc.com/2016/09/20/bitcoin-is-money-us-judge-says-in-case-tied-to-jpmorgan-hack.html|date=20 September 2016|work=CNBC|access-date=8 August 2019}} The U.S. Treasury categorizes bitcoin as a decentralized virtual currency.{{cite web |url=https://www.fincen.gov/sites/default/files/2016-08/20131118.pdf |title=Statement of Jennifer Shasky Calvery, Director Financial Crimes Enforcement Network United States Department of the Treasury Before the United States Senate Committee on Banking, Housing, and Urban Affairs Subcommittee on National Security and International Trade and Finance Subcommittee on Economic Policy |publisher=Financial Crimes Enforcement Network |work=fincen.gov |date=19 November 2013 |access-date=1 June 2014}} The Commodity Futures Trading Commission classifies bitcoin as a commodity, and the Internal Revenue Service classifies it as an asset.{{Cite news|title=The IRS is warning thousands of cryptocurrency holders to pay their taxes|url=https://www.cnbc.com/2019/07/26/irs-is-warning-thousands-of-cryptocurrency-holders-to-pay-their-taxes.html|last=Rooney|first=Kate|date=26 July 2019|work=CNBC|access-date=8 August 2019}}

The South African Revenue Service,{{cite news|last1=Rangongo|first1=Timothy|title=Own bitcoin or ethereum? Sars is coming for you.|url=https://www.businessinsider.co.za/own-bitcoin-sars-is-coming-for-you-2018-4|access-date=22 May 2018|work=Business Insider|date=April 2018}} the legislation of Canada,[http://www.mondaq.com/canada/x/313572/securitization+structured+finance/Can+You+Take+A+Security++Interest+In+Bitcoin Canada: Can You Take A Security Interest In Bitcoin?],Mondaq, May 14.2014.Wednesday 4:10PM EST, Ms M. Sandra Appel(A security Agreement for Bitcoin: Is it Possible?) the Ministry of Finance of the Czech Republic{{cite web|title=Sdělení Ministerstva financí k účtování a vykazování digitálních měn|url=https://www.mfcr.cz/cs/verejny-sektor/ucetnictvi-a-ucetnictvi-statu/ucetnictvi/legislativa-v-ucetnictvi/2018/sdeleni-ministerstva-financi-k-uctovani-31864|website=mfcr.cz|publisher=Ministerstvo financí České republiky|access-date=22 May 2018|archive-date=23 May 2018|archive-url=https://web.archive.org/web/20180523011107/https://www.mfcr.cz/cs/verejny-sektor/ucetnictvi-a-ucetnictvi-statu/ucetnictvi/legislativa-v-ucetnictvi/2018/sdeleni-ministerstva-financi-k-uctovani-31864|url-status=dead}} and several others classify bitcoin as an intangible asset.

The Bundesbank says that bitcoin is not a virtual currency or digital money. It recommends using the term "crypto token".{{cite web |title=Regulation of Cryptocurrency Around the World |url=https://www.loc.gov/law/help/cryptocurrency/cryptocurrency-world-survey.pdf |website=Library of Congress |publisher=The Law Library of Congress, Global Legal Research Center |access-date=14 August 2018 |date=June 2018}}

The People's Bank of China has stated that bitcoin "is fundamentally not a currency but an investment target".{{cite news |url=https://www.bloomberg.com/news/2014-04-10/china-s-bitcoin-exchanges-say-banks-will-close-their-accounts.html |title=China's Bitcoin Exchanges Say Banks Will Close Their Accounts |quote=The central bank will keep watching risks from Bitcoin, which is fundamentally not a currency but an investment target, Sheng Songcheng, head of the monetary authority's statistics department, told reporters in Beijing on Jan. 15 2014. |newspaper=Bloomberg |date=10 April 2014 |access-date=11 April 2014}}

Journalists and academics also debate what to call bitcoin. Some media outlets do make a distinction between "real" money and bitcoins,{{cite web |url=http://www.bloombergview.com/articles/2013-11-29/building-better-bitcoins |title=Building Better Bitcoins |publisher=Bloomberg LP |work=Bloomberg View |date=29 November 2013 |access-date=25 May 2014 |author=Carter, Stephen L. |quote=A principal knock on bitcoins has been the claim that they are inherently insecure. The principal defense has been that they are as secure as "real" currency. |archive-date=26 May 2014 |archive-url=https://web.archive.org/web/20140526030820/http://www.bloombergview.com/articles/2013-11-29/building-better-bitcoins |url-status=dead }} while others call bitcoin real money.{{cite news |last1=Satran |first1=Richard |title=How Did Bitcoin Become a Real Currency? |url=http://money.usnews.com/money/personal-finance/articles/2013/05/15/how-did-bitcoin-become-a-real-currency |access-date=22 December 2014 |work=Forbes |date=15 May 2013}} The Wall Street Journal declared it a commodity in December 2013.{{cite news |url=https://blogs.wsj.com/venturecapital/2013/12/12/with-25m-coinbase-to-push-bitcoin-from-commodity-to-currency/ |title=Coinbase to Push Bitcoin From Commodity to Currency, With $25M From Investors |newspaper=The Wall Street Journal |date=12 December 2013 |access-date=27 January 2014 |author=Chapman, Lizette}} A Forbes journalist referred to it as digital collectible.{{cite news |url=https://www.forbes.com/sites/louiswoodhill/2013/04/11/bitcoins-are-digital-collectibles-not-real-money/ |archive-url=https://web.archive.org/web/20130413211910/http://www.forbes.com/sites/louiswoodhill/2013/04/11/bitcoins-are-digital-collectibles-not-real-money/ |url-status=dead |archive-date=13 April 2013 |title=Bitcoins Are Digital Collectibles, Not Real Money |work=Forbes |date=4 November 2013 |access-date=27 January 2014 |author=Woodhill, Louis}} Two University of Amsterdam computer scientists proposed the term "money-like informational commodity".{{cite arXiv |author1=Bergstra, J. A. |author2=Weijland, P. |date=February 2014 |title=Bitcoin: a money-like informational commodity |eprint=1402.4778|class=cs.CY }}

In addition to the above, bitcoin is also characterized as a payment system.{{r|primer|p=1}}

According to research produced by Cambridge University in 2017, there are between 2.9 million and 5.8 million unique users actively using a cryptocurrency wallet, most of them using bitcoin.{{Cite journal |last1=HILEMAN |first1=GARRICK |last2=RAUCHS |first2=MICHEL |title=GLOBAL CRYPTOCURRENCY BENCHMARKING STUDY |url=https://www.jbs.cam.ac.uk/wp-content/uploads/2020/08/2017-04-20-global-cryptocurrency-benchmarking-study.pdf |journal=University of Cambridge}} The number of active users has grown significantly since 2013 (there were 0.3 to 1.3 million unique users at the time).{{cite web|last1=Hileman|first1=Garrick|last2=Rauchs|first2=Michel|title=Global Cryptocurrency Benchmarking Study|url=https://www.jbs.cam.ac.uk/fileadmin/user_upload/research/centres/alternative-finance/downloads/2017-global-cryptocurrency-benchmarking-study.pdf|publisher=Cambridge University|access-date=14 April 2017|archive-date=10 April 2017|archive-url=https://web.archive.org/web/20170410130007/https://www.jbs.cam.ac.uk/fileadmin/user_upload/research/centres/alternative-finance/downloads/2017-global-cryptocurrency-benchmarking-study.pdf|url-status=dead}}

According to a 2024 survey by Gemini, more than one-fifth of Americans own cryptocurrency.https://www.eiu.com/n/cryptocurrencys-growing-role-in-us-elections/ People who own cryptocurrency tend to be young, racially diverse, and see cryptocurrency as a way to gain more freedom over their financial lives.https://www.cbsnews.com/news/who-were-the-2024-elections-crypto-voters-60-minutes/

A 2024 survey from the Pew Research Center found that 17% of American adults have invested in, traded or used a cryptocurrency.https://www.washingtonpost.com/technology/2025/03/07/trump-crypto-summit-white-house/

As of 2025, Pakistan has 15-20 million crypto users, according to country's officials.https://www.reuters.com/world/asia-pacific/pakistan-turns-bitcoin-miners-ai-data-centers-use-surplus-power-2025-04-09/

File:BitcoinATM.JPG

Bitcoins can be bought and sold both on- and offline. Participants in online exchanges offer bitcoin buy and sell bids. Using an online exchange to obtain bitcoins entails some risk, and, according to a study published in April 2013, 45% of exchanges fail and take client bitcoins with them.{{cite magazine |url=https://www.wired.co.uk/news/archive/2013-04/26/large-bitcoin-exchanges-attacks |title=Study: 45 percent of Bitcoin exchanges end up closing |date=26 April 2013 |magazine=Wired |access-date=28 April 2013 |author=Steadman, Ian }} Exchanges have since implemented measures to provide proof of reserves in an effort to convey transparency to users.{{cite news |last1=Volat |first1=Joe |title=Bitfinex and BitGo Partner to Create World's First Real-Time Proof of Reserve Bitcoin Exchange |url=http://www.businesswire.com/news/home/20150603005462/en/Bitfinex-BitGo-Partner-Create-World%E2%80%99s-Real-Time-Proof |access-date=5 November 2015 |publisher=Business Wire |date=3 June 2015}} Offline, bitcoins may be purchased directly from an individual{{cite web |author=Lauren Orsini |url=http://www.businessinsider.com/heres-what-happened-when-i-bought-bitcoin-in-person-2013-10 |title=Here's What Happened When I Bought Bitcoin In Person |website=Business Insider |date=23 October 2013 |access-date=4 February 2014}} or at a bitcoin ATM.{{cite news |url=https://www.usatoday.com/story/money/business/2014/02/19/bitcoin-atm-austin/5623387/ |work=USA Today |date=20 February 2014 |first=Rick |last=Jervis |title=Bitcoin ATMs come to USA |access-date=31 October 2014}} Bitcoin machines are not however traditional ATMs. Bitcoin kiosks are machines connected to the Internet, allowing the insertion of cash in exchange for bitcoins. Bitcoin kiosks do not connect to a bank and may also charge transaction fees as high as 7% and exchange rates US$50 over rates from elsewhere.{{cite web |title=Risks to consumers posed by virtual currencies |url=http://files.consumerfinance.gov/f/201408_cfpb_consumer-advisory_virtual-currencies.pdf |publisher=Consumer Financial Protection Bureau |access-date=10 July 2016 |date=August 2014}}

As of 2016 it was estimated there were over 800 bitcoin ATMs operating globally, the majority (500+) being in the United States.{{citation needed|date=June 2021}}

{{Further|2018 cryptocurrency crash}}

{{Further|Cryptocurrency bubble}}

{{Update|section|date=September 2019}}

According to Mark T. Williams, {{as of | 2014 | lc = y}}, bitcoin has volatility seven times greater than gold, eight times greater than the S&P 500, and 18 times greater than the U.S. dollar.{{cite web |url=http://management.bu.edu/files/2014/10/Wlliams-World-Bank-10-21-2014.pdf |title=Virtual Currencies – Bitcoin Risk |publisher=Boston University |work=World Bank Conference Washington DC |date=21 October 2014 |access-date=11 November 2014 |author=Williams, Mark T.}}

Attempting to explain the high volatility, a group of Japanese scholars stated that there is no stabilization mechanism.{{cite journal |author1=Mitsuru Iwamura |author2=Tsutomu Matsumoto |author3=Kenji Saito |author4=Yukinobu Kitamura |title=Can We Stabilize the Price of Cryptocurrency?: Understanding the Design of Bitcoin and its Potential Competitiveness with the Central Bank Money |ssrn=2519367 |website=Social Science Research Network |date=24 July 2014 |quote=The first instability stems from an inflexible supply curve of Bitcoin, which amplifies Bitcoin price volatility; the miners' revenue/reward fully absorbs any price changes. There is no price stabilization mechanism.}} The Bitcoin Foundation contends that high volatility is due to insufficient liquidity.{{cite news |last=Wilkes |first=Tommy |url=https://www.reuters.com/article/us-bitcoin-currency-idUSBRE93A0P020130411 |title=Backer defends virtual currency Bitcoin after big fall |work=Reuters |date=11 April 2013 |access-date=7 January 2014}}

As of 2014, pro-bitcoin venture capitalists argued that the greatly increased trading volume that planned high-frequency trading exchanges would generate is needed to decrease price volatility.

The price of bitcoins has gone through various cycles of appreciation and depreciation referred to by some as bubbles and busts.{{cite web |url=https://www.theguardian.com/commentisfree/2013/apr/03/bitcoin-currency-bubble-crash-not-rocking-financial-markets |title=Confused about Bitcoin? It's 'the Harlem Shake of currency' |work=The Guardian |date=3 April 2013 |access-date=2 May 2014 |author=Moore, Heidi}} In 2011, the value of one bitcoin rapidly rose from about US$0.30 to US$32 before returning to US$2.{{cite news |url=https://www.washingtonpost.com/news/the-switch/wp/2013/11/05/when-will-the-people-who-called-bitcoin-a-bubble-admit-they-were-wrong/ |title=When will the people who called Bitcoin a bubble admit they were wrong |newspaper=The Washington Post |date=5 November 2013 |access-date=10 January 2014 |author=Lee, Timothy}} In the latter half of 2012 and during the 2012–13 Cypriot financial crisis, the bitcoin price began to rise,{{cite web |last=Liu |first=Alec |url=https://www.vice.com/en/article/cyprus-spain-when-governments-take-your-money-bitcoin-looks-really-good/ |title=When Governments Take Your Money, Bitcoin Looks Really Good |publisher=Motherboard |date=19 March 2013 |access-date=7 January 2014 |url-status=live |archive-url=https://web.archive.org/web/20140207194506/http://motherboard.vice.com/blog/cyprus-spain-when-governments-take-your-money-bitcoin-looks-really-good |archive-date=7 February 2014 }} reaching a high of US$266 on 10 April 2013, before crashing to around US$50.{{citation needed|date=November 2023}} On 29 November 2013, the cost of one bitcoin rose to the all-time peak of US$1,242.{{cite news |url=https://money.cnn.com/2013/11/29/investing/bitcoin-gold/index.html |title=Bitcoin worth almost as much as gold |author=Ben Rooney |date=29 November 2013 |publisher=CNN |access-date=31 October 2014}} Some evidence suggests that part of this peak in the price of bitcoin was due to price manipulation.{{cite journal|last=Gandal|first=Neil|author2=JT Hamrick|author3=Tyler Moore|author4=Tali Oberman|title=Price manipulation in the Bitcoin ecosystem|journal=Journal of Monetary Economics|year=2018|volume=(forthcoming)|pages=86–96|doi=10.1016/j.jmoneco.2017.12.004|s2cid=26358036|doi-access=free}} In 2014, the price fell sharply, and as of April remained depressed at little more than half 2013 prices.{{citation needed|date=November 2023}}

In January 2015, noting that the bitcoin price had dropped to its lowest level since spring 2013 – around US$224 – The New York Times suggested that "[w]ith no signs of a rally in the offing, the industry is bracing for the effects of a prolonged decline in prices. In particular, bitcoin mining companies, which are essential to the currency's underlying technology, are flashing warning signs."{{cite news |last1 = Ember |first1 = Sydney |title = As Bitcoin's Price Slides, Signs of a Squeeze |url = https://dealbook.nytimes.com/2015/01/13/as-bitcoins-price-slides-signs-of-a-squeeze/?_r=0 |access-date = 16 January 2015 |work = The New York Times |date = 13 January 2015 |url-status = live |archive-url = https://web.archive.org/web/20150116110712/http://dealbook.nytimes.com/2015/01/13/as-bitcoins-price-slides-signs-of-a-squeeze/?_r=0 |archive-date = 16 January 2015 |df = dmy-all }} Also in January 2015, Business Insider reported that deep web drug dealers were "freaking out" as they lost profits through being unable to convert bitcoin revenue to cash quickly enough as the price declined – and that there was a danger that dealers selling reserves to stay in business might force the bitcoin price down further.{{cite web |last1 = Price |first1 = Rob |title = Deep Web Drug Dealers Are Freaking Out About The Bitcoin Crash |url = https://www.businessinsider.com/bitcoin-crash-drug-dealers-2015-1?r=US |access-date = 18 January 2015 |website = Business Insider |date = 16 January 2015 |url-status = live |archive-url = https://web.archive.org/web/20150118085802/http://uk.businessinsider.com/bitcoin-crash-drug-dealers-2015-1?r=US |archive-date = 18 January 2015 |df = dmy-all }}

Economic theory suggests that the volatility of the price of bitcoin will drop when business and consumer usage of bitcoin increases.{{cite journal|last=Bolt|first=Wilko|author2=Maarten van Oordt|title=On the Value of Virtual Currencies|journal=Bank of Canada Staff Working Paper|year=2016|volume=42|doi=10.2139/ssrn.2767609|hdl=10419/148149|s2cid=219392222|hdl-access=free}} The reason is that the usage for payments reduces the sensitivity of the exchange rate to the beliefs of speculators about the future value of a virtual currency. According to The Wall Street Journal, {{as of|2016|4|lc=y}}, bitcoin is starting to look slightly more stable than gold.{{cite news |last1=Yang |first1=Stephanie |title=Is Bitcoin Becoming More Stable Than Gold? |url=https://blogs.wsj.com/moneybeat/2016/04/19/is-bitcoin-becoming-more-stable-than-gold/ |access-date=20 April 2016 |newspaper=The Wall Street Journal |date=19 April 2016}} On 3 March 2017, the price of one bitcoin has surpassed the value of an ounce of gold for the first time and its price surged to an all-time high.{{Cite news |title=Bitcoin value tops gold for first time |url=https://www.bbc.com/news/business-39149475 |newspaper=BBC |date=3 March 2017|access-date =22 April 2017}}{{Cite news |title=Bitcoin value surpasses gold for the first time |url=https://www.telegraph.co.uk/technology/2017/03/03/bitcoin-value-surpasses-gold-first-time/ |newspaper=Telegraph |date=3 March 2017|access-date=22 April 2017 |first=Mark |last=Molloy}} A study in Electronic Commerce Research and Applications, going back though the network's historical data, showed the value of the bitcoin network as measured by the price of bitcoins, to be roughly proportional to the square of the number of daily unique users participating on the network. This is a form of Metcalfe's law and suggests that the network was demonstrating network effects proportional to its level of user adoption.{{Cite journal|last=Alabi|first=Ken|date=2017|title=Digital blockchain networks appear to be following Metcalfe's Law|journal=Electronic Commerce Research and Applications|volume=24|doi=10.1016/j.elerap.2017.06.003|pages=23–29|s2cid=28587549 }}

{{Further|Cryptocurrency bubble}}

Bitcoin has been characterized as a speculative bubble by eight laureates of the Nobel Memorial Prize in Economic Sciences: Paul Krugman, Robert J. Shiller, Joseph Stiglitz, Richard Thaler, James Heckman, Thomas Sargent, Angus Deaton, and Oliver Hart; and by central bank officials including Alan Greenspan, Ben Bernanke, Janet Yellen, Agustín Carstens, Vítor Constâncio, and Nout Wellink.

The investors Warren Buffett and George Soros have respectively characterized it as a "mirage" and a "bubble"; while the business executive Jack Ma has called it a "bubble".

In 2014, Nobel laureate Robert J. Shiller stated that bitcoin "exhibited many of the characteristics of a speculative bubble";{{cite news |last = Shiller |first = Robert |title = In Search of a Stable Electronic Currency |url = https://www.nytimes.com/2014/03/02/business/in-search-of-a-stable-electronic-currency.html?_r=0 |work = The New York Times |date = 1 March 2014 |url-status = live |archive-url = https://web.archive.org/web/20141024120222/http://www.nytimes.com/2014/03/02/business/in-search-of-a-stable-electronic-currency.html?_r=0 |archive-date = 24 October 2014 |df = dmy-all }} in 2017, Shiller wrote that bitcoin was the best current example of a speculative bubble.{{cite web |last1=Shiller |first1=Robert J. |title=Three Questions: Prof. Robert Shiller on Bitcoin |url=https://insights.som.yale.edu/insights/three-questions-prof-robert-shiller-on-bitcoin |website=Yale Insights |publisher=Yale School of Management |date=October 19, 2017 |archive-url=https://web.archive.org/web/20171129235859/http://insights.som.yale.edu/insights/three-questions-prof-robert-shiller-on-bitcoin |archive-date=2017-11-29 |url-status=live }}

Economist John Quiggin in 2013 said "bitcoins are the most demonstrably valueless financial asset ever created".{{cite news |url = http://nationalinterest.org/commentary/the-bitcoin-bubble-bad-hypothesis-8353 |title = The Bitcoin Bubble and a Bad Hypothesis |last = Quiggin |first = John |work = The National Interest |date = 16 April 2013 |url-status = live |archive-url = https://web.archive.org/web/20141022081554/http://nationalinterest.org/commentary/the-bitcoin-bubble-bad-hypothesis-8353 |archive-date = 22 October 2014 |df = dmy-all }}

Researchers Neil Gandal, JT Hamrick, Tyler Moore, and Tali Oberman claimed that in late 2013, price manipulation by one person likely caused a price spike from US$150 to more than US$1000.{{Cite web |url=https://techcrunch.com/2018/01/15/researchers-finds-that-one-person-likely-drove-bitcoin-from-150-to-1000/ |title=Researchers find that one person likely drove Bitcoin from $150 to $1,000 |last=Biggs |first=John |website=TechCrunch |date=15 January 2018 |url-status=live |archive-url=https://web.archive.org/web/20180115180151/https://techcrunch.com/2018/01/15/researchers-finds-that-one-person-likely-drove-bitcoin-from-150-to-1000/ |archive-date=15 January 2018 |df=dmy-all }}

Nobel laureate Joseph Stiglitz in 2017 said "It's a bubble that's going to give a lot of people a lot of exciting times as it rides up and then goes down." He emphasized its use by criminals, its lack of a socially useful purpose, and said that it should be outlawed.{{cite news |last1=Costelloe |first1=Kevin |title=Bitcoin 'Ought to Be Outlawed,' Nobel Prize Winner Stiglitz Says |url=https://www.bloomberg.com/news/articles/2017-11-29/bitcoin-ought-to-be-outlawed-nobel-prize-winner-stiglitz-says-jal10hxd |publisher=Bloomberg |date=November 29, 2017 |quote=It doesn't serve any socially useful function. |archive-url=https://web.archive.org/web/20180612224313/https://www.bloomberg.com/news/articles/2017-11-29/bitcoin-ought-to-be-outlawed-nobel-prize-winner-stiglitz-says-jal10hxd |archive-date=2018-06-12 |url-status=live }}

Nobel laureate Paul Krugman wrote in 2018 that bitcoin is "a bubble wrapped in techno-mysticism inside a cocoon of libertarian ideology". He criticized it as a very slow and expensive means of payment, used mostly to buy blackmarket goods, without a "tether to reality".{{cite news |last1=Krugman |first1=Paul |title=Bubble, Bubble, Fraud and Trouble |url=https://www.nytimes.com/2018/01/29/opinion/bitcoin-bubble-fraud.html |work=The New York Times |date=January 29, 2018 |archive-url=https://web.archive.org/web/20180604124251/https://www.nytimes.com/2018/01/29/opinion/bitcoin-bubble-fraud.html |archive-date=2018-06-04 |url-status=live }}

Nobel laureate Richard Thaler emphasizes the irrationality in the bitcoin market that has led to the bubble, demonstrating the irrationality with the example of firms that have added the word blockchain to their names which have then had large increases in their stock price. The extremely high volatility in bitcoin's price also is due to irrationality according to Thaler.{{cite news |title=Economics Nobel prize winner, Richard Thaler: 'The market that looks most like a bubble to me is Bitcoin and its brethren' |url=https://econews.pt/2018/01/22/economics-nobel-prize-winner-richard-thaler-the-market-that-looks-most-like-a-bubble-to-me-is-bitcoin-and-its-brethren/ |publisher=ECO Portuguese Economy |date=22 January 2018 |archive-url=https://web.archive.org/web/20180612140603/https://econews.pt/2018/01/22/economics-nobel-prize-winner-richard-thaler-the-market-that-looks-most-like-a-bubble-to-me-is-bitcoin-and-its-brethren/ |archive-date=2018-06-12 |url-status=live }}

Four Nobel laureates, James Heckman, Thomas Sargent, Angus Deaton, and Oliver Hart, characterized bitcoin as a bubble at a joint press conference in 2018. Hart mentioned a talk by Christopher Sims in which he reportedly claimed that bitcoin "should have a zero price". Heckman compared bitcoin to the tulip bubble. Deaton pointed to bitcoin's use by criminals.{{cite news |last1=Wolff-Mann |first1=Ethan |title='Only good for drug dealers': More Nobel prize winners snub bitcoin |url=https://finance.yahoo.com/news/good-drug-dealers-nobel-prize-winners-snub-bitcoin-184903784.html |work=Yahoo Finance |date=April 27, 2018 |archive-url=https://web.archive.org/web/20180612141128/https://finance.yahoo.com/news/good-drug-dealers-nobel-prize-winners-snub-bitcoin-184903784.html |archive-date=2018-06-12 |url-status=live }}

Professor Nouriel Roubini of New York University has called bitcoin the "mother of all bubbles",{{cite news |url=https://www.theguardian.com/technology/2018/feb/02/bitcoin-biggest-bubble-in-history-says-economist-who-predicted-2008-crash|title=Bitcoin biggest bubble in history, says economist who predicted 2008 crash |last=Monaghan |first=Angela |date=2 February 2018 |archive-url=https://web.archive.org/web/20180612141424/https://www.theguardian.com/technology/2018/feb/02/bitcoin-biggest-bubble-in-history-says-economist-who-predicted-2008-crash|archive-date=2018-06-12 |url-status=live }}{{cite news |last1=Roubini |first1=Nouriel |title=Opinion:Bitcoin is the mother of all Bubbles, Roubini says |url=https://www.marketwatch.com/story/bitcoin-and-blockchains-broken-promises-2018-01-26 |agency=Project Syndicate |website=MarketWatch |date=January 29, 2018 |archive-url=https://web.archive.org/web/20180612142654/https://www.marketwatch.com/story/bitcoin-and-blockchains-broken-promises-2018-01-26 |archive-date=2018-06-12 |url-status=live }} writing that the underlying blockchain technology has "massive obstacles standing in its way", including a lack of "common and universal protocols" of the kind that enabled the early Internet.{{r|Roubini}} According to Roubini, bitcoin has failed as a unit of account, a means of payment, and as a store of value; he calls the claim that bitcoin cannot be debased "fraudulent".{{r|Roubini}} "Scammers, swindlers, charlatans, and carnival barkers (all conflicted insiders) have tapped into clueless retail investors' FOMO ('fear of missing out'), and taken them for a ride," he writes.{{r|Roubini}}

In 2019 a research paper by the Asian Development Bank concluded that there is a "strong evidence that bitcoin is not a bubble".{{cite web | url=https://www.adb.org/publications/bursting-bitcoin-bubble-fundamental-value-social-costs | title=Bursting the Bitcoin Bubble: Assessing the Fundamental Value and Social Costs of Bitcoin | date=19 March 2019 | issue=934 | last1=Podhorsky | first1=Andrea }}

Early claims that bitcoin was a bubble focused on the lack of any intrinsic value of bitcoin. These claims include that of former Federal Reserve Chairman Alan Greenspan in 2013. He stated "You really have to stretch your imagination to infer what the intrinsic value of Bitcoin is. I haven't been able to do it."{{cite news |url = https://www.bloomberg.com/news/2013-12-04/greenspan-says-bitcoin-a-bubble-without-intrinsic-currency-value.html |title = Greenspan Says Bitcoin a Bubble Without Intrinsic Currency Value |publisher = Bloomberg LP |work = bloomberg.com |date = 4 December 2013 |author = Kearns, Jeff |url-status = live |archive-url = https://web.archive.org/web/20131229054844/http://www.bloomberg.com/news/2013-12-04/greenspan-says-bitcoin-a-bubble-without-intrinsic-currency-value.html |archive-date = 29 December 2013 |df = dmy-all }}

In 2017 Greenspan compared bitcoin to the Continental dollar, which ultimately collapsed. He said "Humans buy all sorts of things that aren't worth anything. People gamble in casinos when the odds are against them. It has never stopped anybody."{{cite news |last1=Moyer |first1=Liz |title=Greenspan compares bitcoin to Colonial America currency that eventually became worthless |url=https://www.cnbc.com/2017/12/06/greenspan-compares-bitcoin-to-colonial-america-currency-that-eventually-became-worthless.html |publisher=CNBC |date=6 December 2017 |archive-url=https://web.archive.org/web/20180612141221/https://www.cnbc.com/2017/12/06/greenspan-compares-bitcoin-to-colonial-america-currency-that-eventually-became-worthless.html |archive-date=2018-06-12 |url-status=live }}

Former Fed Chair Ben Bernanke (in 2015) and outgoing Fed Chair Janet Yellen (in 2017) have both expressed concerns about the stability of bitcoin's price and its lack of use as a medium of transactions.{{cite news |last1=Phillips |first1=Matt |title=Ben Bernanke on bubbles, bitcoin, and why he's not a Republican anymore |url=https://qz.com/553407/ben-bernanke-on-bubbles-bitcoin-and-why-hes-not-a-republican-anymore/ |website=Quartz |date=November 19, 2015 |archive-url=https://web.archive.org/web/20180404185359/https://qz.com/553407/ben-bernanke-on-bubbles-bitcoin-and-why-hes-not-a-republican-anymore/ |archive-date=2018-04-04 |url-status=live }}{{cite news |title=What's Blowing Up the Bitcoin Bubble? |url=http://knowledge.wharton.upenn.edu/article/bitcoin-sound-investment/ |publisher=Knowledge@Wharton. |date=4 January 2018 |archive-url=https://web.archive.org/web/20180608141902/http://knowledge.wharton.upenn.edu/article/bitcoin-sound-investment/ |archive-date=2018-06-08 |url-status=live }}

Agustín Carstens, head of the Bank of International Settlements, has called bitcoin "a combination of a bubble, a Ponzi scheme and an environmental disaster", and warned of cryptocurrencies undermining public trust in the financial system.{{cite news |title=Central banker takes stab at bitcoin 'bubble' |url=https://phys.org/news/2018-02-central-banker-stab-bitcoin.html |agency=AFP |work=Phys.org |date=February 6, 2018 |archive-url=https://web.archive.org/web/20180612143028/https://phys.org/news/2018-02-central-banker-stab-bitcoin.html |archive-date=2018-06-12 |url-status=live }}

David Andolfatto, a vice president at the Federal Reserve Bank of St. Louis, stated, "Is bitcoin a bubble? Yes, if bubble is defined as a liquidity premium." According to Andolfatto, the price of bitcoin "consists purely of a bubble".{{cite web |url = http://www.stlouisfed.org/dialogue-with-the-fed/assets/Bitcoin-3-31-14.pdf |title = Bitcoin and Beyond: The Possibilities and Pitfalls of Virtual Currencies |publisher = Federal Reserve Bank of St. Louis |work = Dialogue with the Fed |date = 31 March 2014 |author = Andolfatto, David |url-status = live |archive-url = https://web.archive.org/web/20140409044505/http://www.stlouisfed.org/dialogue-with-the-fed/assets/Bitcoin-3-31-14.pdf |archive-date = 9 April 2014 |df = dmy-all }}{{rp|21}}

Comparisons of bitcoin to the tulip mania of seventeenth-century Holland have been made by the vice-president of the European Central Bank, Vítor Constâncio{{cite news |url = https://www.ft.com/content/18507a26-9fb4-11e7-8cd4-932067fbf946 |title = Bitcoin is like Tulipmania, says ECB vice-president |date = 22 September 2017 |newspaper = The Financial Times |url-status = live |archive-url = https://web.archive.org/web/20170930234500/https://www.ft.com/content/18507a26-9fb4-11e7-8cd4-932067fbf946 |archive-date = 30 September 2017 |df = dmy-all }} and by former president of the Dutch Central Bank, Nout Wellink.{{cite news |url = https://www.theguardian.com/technology/2013/dec/04/bitcoin-bubble-tulip-dutch-banker |title = Bitcoin hype worse than 'tulip mania', says Dutch central banker |date = 4 December 2013 |newspaper = The Guardian |url-status = live |archive-url = https://web.archive.org/web/20170320051840/https://www.theguardian.com/technology/2013/dec/04/bitcoin-bubble-tulip-dutch-banker |archive-date = 20 March 2017 |df = dmy-all }} In 2013, Wellink remarked, "This is worse than the tulip mania ... At least then you got a tulip [at the end], now you get nothing."

{{external media | width = 210px | video1 =[https://www.youtube.com/watch?v=ZceJMFXm57s Bitcoin Is More Than a Bubble And Here To Stay], 1:39:01, IntelligenceSquared Debates{{cite web | title =Bitcoin Is More Than a Bubble And Here To Stay | publisher =Intelligence Squared | date =April 23, 2018 | url =https://www.intelligencesquaredus.org/debates/bitcoin-more-bubble-and-here-stay | archive-url =https://web.archive.org/web/20180428031149/https://www.intelligencesquaredus.org/debates/bitcoin-more-bubble-and-here-stay | archive-date =2018-04-28 | url-status =live }}{{cite news|last1=Hankin|first1=Aaron|title=Business moguls beaten in 'bitcoin bubble' debate|url=https://www.marketwatch.com/story/business-moguls-beaten-in-bitcoin-bubble-debate-2018-04-23|publisher=Market Watch|archive-url=https://web.archive.org/web/20180520124739/https://www.marketwatch.com/story/business-moguls-beaten-in-bitcoin-bubble-debate-2018-04-23|archive-date=2018-05-20|url-status=live}}}}

American investor Warren Buffett warned investors about bitcoin in 2014, "Stay away from it. It's a mirage, basically."{{cite news |url = https://www.cnbc.com/2014/03/14/buffett-blasts-bitcoin-as-mirage-stay-away.html |title = Bitcoin? Here's what Warren Buffett is saying |last = Crippen |first = Alex |date = 14 March 2014 |website = CNBC |url-status = live |archive-url = https://web.archive.org/web/20170113070447/https://www.cnbc.com/2014/03/14/buffett-blasts-bitcoin-as-mirage-stay-away.html |archive-date = 13 January 2017 |df = dmy-all }} He repeated the warning in 2018 calling bitcoin "probably rat poison squared". He believes that bitcoin is a non-productive asset. "When you're buying nonproductive assets, all you're counting on is the next person is going to pay you more because they're even more excited about another next person coming along."{{cite news |last1=Imbert |first1=Fred |title=Warren Buffett on bitcoin: It doesn't produce anything except more buyers looking to sell |url=https://www.cnbc.com/2018/05/07/warren-buffett-on-bitcoin-it-doesnt-produce-anything.html |publisher=CNBC |date=7 May 2018 |archive-url=https://web.archive.org/web/20180625111119/https://www.cnbc.com/2018/05/07/warren-buffett-on-bitcoin-it-doesnt-produce-anything.html |archive-date=2018-06-25 |url-status=live }}

Buffett's close associate Charlie Munger is even more direct in his disdain. Trading cryptocurrencies is "just dementia" according to Munger. Bitcoin is "worthless" and a "turd".{{cite news |last1=Imbert |first1=Fred |title=Berkshire's Charlie Munger: 'Bitcoin is worthless, artificial gold' |url=https://www.cnbc.com/2018/05/07/berkshires-charlie-munger-bitcoin-is-worthless-artificial-gold.html |publisher=CNBC |date=7 May 2018 |archive-url=https://web.archive.org/web/20180612142239/https://www.cnbc.com/2018/05/07/berkshires-charlie-munger-bitcoin-is-worthless-artificial-gold.html |archive-date=2018-06-12 |url-status=live }}

John Bogle, the founder of The Vanguard Group, is also very direct "Avoid bitcoin like the plague. Did I make myself clear? .... There is nothing to support bitcoin except the hope that you will sell it to someone for more than you paid for it."{{cite news |last1=Grant |first1=Nico |title=Vanguard Founder Jack Bogle Says 'Avoid Bitcoin Like the Plague' |url=https://www.bloomberg.com/news/articles/2017-11-28/vanguard-founder-jack-bogle-says-avoid-bitcoin-like-the-plague |publisher=Bloomberg |date=November 28, 2017 |archive-url=https://web.archive.org/web/20180612153137/https://www.bloomberg.com/news/articles/2017-11-28/vanguard-founder-jack-bogle-says-avoid-bitcoin-like-the-plague |archive-date=2018-06-12 |url-status=live }}

George Soros, answering an audience question after a speech in Davos, Switzerland, in 2018, said that cryptocurrencies are not a store of value but are an economic bubble. Nevertheless, they may not crash due to the rising influence of dictators trying to "build a nest egg abroad".{{cite news |last1=Porzecanski |first1=Katia |title=George Soros: Bitcoin is a bubble, Trump is a 'danger to the world' |url=https://www.theglobeandmail.com/globe-investor/investment-ideas/george-soros-says-bitcoin-bubble-wont-have-sharp-break-like-others/article37739168/ |agency=Bloomberg News |newspaper=Globe and Mail |date=25 January 2018 |archive-url=https://web.archive.org/web/20180609071424/https://www.theglobeandmail.com/globe-investor/investment-ideas/george-soros-says-bitcoin-bubble-wont-have-sharp-break-like-others/article37739168/ |archive-date=9 June 2018 |url-status=live}}

James Chanos, known as the "dean of the short sellers", believes that bitcoin and other cryptocurrencies are a mania and useful only for tax avoidance or otherwise hiding income from the government. Bitcoin "is simply a security speculation game masquerading as a technological breakthrough in monetary policy".{{cite web |last1=Parramore |first1=Lynn |title=Jim Chanos: "Cryptocurrency is a security speculation game masquerading as a technological breakthrough" |url=https://www.ineteconomics.org/perspectives/blog/jim-chanos-cryptocurrency-is-a-security-speculation-game-masquerading-as-a-technological-breakthrough |website=Institute for New Economic Thinking |date=4 June 2018 |quote=... if you say, well, fiat currency is going to bring the world down, which could, of course, happen, then I say the last thing I'd want to own is bitcoin if the grid goes down. |archive-url=https://web.archive.org/web/20180612141840/https://www.ineteconomics.org/perspectives/blog/jim-chanos-cryptocurrency-is-a-security-speculation-game-masquerading-as-a-technological-breakthrough |archive-date=2018-06-12 |url-status=live }}

Two lead software developers of bitcoin, Gavin Andresen{{cite web |title = Bitcoin's History of Crushing Speculators |author = Dan Caplinger |publisher = The Motley Fool |date = 4 April 2013 |url = http://www.fool.com/retirement/general/2013/04/04/bitcoins-history-of-crushing-speculators.aspx |url-status = live |archive-url = https://web.archive.org/web/20140107121554/http://www.fool.com/retirement/general/2013/04/04/bitcoins-history-of-crushing-speculators.aspx |archive-date = 7 January 2014 |df = dmy-all }} and Mike Hearn,{{cite news |url = https://www.bbc.co.uk/news/magazine-25332746 |title = Bitcoin: Price v hype |publisher = BBC |work = bbc.com |date = 13 December 2013 |author = Barford, Vanessa |url-status = live |archive-url = https://web.archive.org/web/20131219213618/http://www.bbc.co.uk/news/magazine-25332746 |archive-date = 19 December 2013 |df = dmy-all }} have warned that bubbles may occur.

On 13 September 2017, Jamie Dimon referred to bitcoin to as a "fraud",{{cite news |last1=Cheng |first1=Evelyn |title=Warren Buffett and Jamie Dimon on bitcoin: Beware |url=https://www.cnbc.com/2018/06/07/warren-buffett-and-jamie-dimon-on-bitcoin-beware.html |publisher=CNBC |date=7 June 2018 |archive-url=https://web.archive.org/web/20180609122312/https://www.cnbc.com/2018/06/07/warren-buffett-and-jamie-dimon-on-bitcoin-beware.html |archive-date=9 June 2018 |url-status=live}} comparing it to pyramid schemes, and stated that JPMorgan Chase would fire employees trading while the company released a report critical of the cryptocurrency.{{cite news|last=Dugan|first=Kevin|title=JPMorgan CEO warns trading revenue is set to drop|work=New York Post|publisher=News Corp|date=September 12, 2017|url=https://nypost.com/2017/09/12/jpmorgan-ceo-warns-trading-revenue-is-set-to-drop/|archive-url=https://web.archive.org/web/20181221041612/https://nypost.com/2017/09/12/jpmorgan-ceo-warns-trading-revenue-is-set-to-drop/|archive-date=2018-12-21|url-status=live}} However, in a January 2018 interview Jamie Dimon voiced regrets about his earlier bitcoin remarks, and noted "The blockchain is real, You can have cryptodollars in yen and stuff like that. ICOs ... you got to look at everyone individually.".{{cite web|work=CNBC|title=Jamie Dimon says he regrets calling bitcoin a fraud and believes in the technology behind it|url=https://www.cnbc.com/2018/01/09/jamie-dimon-says-he-regrets-calling-bitcoin-a-fraud.html|date=9 January 2018|archive-url=https://web.archive.org/web/20180113085325/https://www.cnbc.com/2018/01/09/jamie-dimon-says-he-regrets-calling-bitcoin-a-fraud.html|archive-date=2018-01-13|url-status=live}}{{cite news|last=Hackett|first=Robert|title=No, JPMorgan Chase CEO Jamie Dimon Has Not Changed His Stance on Bitcoin|work=Fortune|publisher=Meredith Corporation|date=January 9, 2018|url=http://fortune.com/2018/01/09/bitcoin-price-chase-jamie-dimon/|archive-url=https://web.archive.org/web/20180612142931/http://fortune.com/2018/01/09/bitcoin-price-chase-jamie-dimon/|archive-date=2018-06-12|url-status=live}} In 2023, JPMorgan Chase banned crypto payments in the United Kingdom saying it will no longer allow its customers to purchase cryptocurrencies using their JPMorgan debit cards or through bank transfers.{{cite web|work=CNBC|title=Coinbase CEO slams JPMorgan for banning crypto payments in UK, suggests government should act|url=https://www.cnbc.com/2023/09/29/coinbase-ceo-jpmorgan-chase-uk-shouldnt-deplatform-crypto-industry.html|date=29 September 2023}}

Alibaba chairman Jack Ma stated in 2018, "There is no bubble for blockchain, but there's a bitcoin bubble"{{cite news |last=Yang |first=Yingzhi |title=There's a bitcoin bubble, says Alibaba executive chairman Jack Ma |url=http://www.scmp.com/tech/enterprises/article/2146648/theres-bitcoin-bubble-says-alibaba-executive-chairman-jack-ma |newspaper=South China Morning Post |date=18 May 2018 |archive-url=https://web.archive.org/web/20180610214759/http://www.scmp.com/tech/enterprises/article/2146648/theres-bitcoin-bubble-says-alibaba-executive-chairman-jack-ma |archive-date=10 June 2018 |url-status=live }} and "[blockchain] technology itself isn't the bubble, but bitcoin likely is".{{Cite web|url=https://www.cnbc.com/2018/06/25/alibabas-jack-ma-calls-bitcoin-a-possible-bubble-while-embracing-its-.html|title=Alibaba's Jack Ma calls bitcoin a bubble|last=Rooney|first=Kate|date=25 June 2018|website=CNBC|access-date=15 April 2018}}

Some journalists,{{cite news|last1=Braue|first1=David|title=Bitcoin confidence game is a Ponzi scheme for the 21st century|url=https://www.zdnet.com/article/bitcoin-confidence-game-is-a-ponzi-scheme-for-the-21st-century/|access-date=5 October 2016|work=ZDNet|date=11 March 2014}} economists,{{cite web |url=https://www.cnbc.com/2014/03/10/nches-stinging-attack-on-bitcoin.html |title=Roubini launches stinging attack on bitcoin |publisher=CNBC |date=10 March 2014 |access-date=2 July 2014 |author=Clinch, Matt}}{{cite news |url=http://www.dailydot.com/opinion/why-bitcoin-ponzi-scheme/ |title=Bitcoins: The second biggest Ponzi scheme in history |work=The Daily Dot |date=3 December 2013 |access-date=23 May 2016 |author=North, Gary | author-link=Gary North (economist)}} and the central bank of Estonia{{cite news |url=https://www.bloomberg.com/news/2014-01-30/bitcoin-ponzi-scheme-worry-sparks-estonia-central-bank-caution.html |title=Bitcoin 'Ponzi' Concern Sparks Warning From Estonia Bank |publisher=Bloomberg |work=bloomberg.com |date=31 January 2014 |access-date=1 April 2014 |author1=Ott Ummelas |author2=Milda Seputyte |name-list-style=amp}} have voiced concerns that bitcoin is a Ponzi scheme. In 2013, Eric Posner, a law professor at the University of Chicago, stated that "a real Ponzi scheme takes fraud; bitcoin, by contrast, seems more like a collective delusion."{{cite web |url=http://www.slate.com/articles/news_and_politics/view_from_chicago/2013/04/bitcoin_is_a_ponzi_scheme_the_internet_currency_will_collapse.html |title=Bitcoin is a Ponzi scheme—the Internet's favorite currency will collapse. |work=Slate |date=11 April 2013 |access-date=1 April 2014 |author=Posner, Eric |author-link=Eric Posner}} In 2014 reports by both the World Bank{{cite web |title=Ponzis: The Science and Mystique of a Class of Financial Frauds |url=http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2014/07/16/000112742_20140716115536/Rendered/PDF/WPS6967.pdf |author=Kaushik Basu |publisher=World Bank Group |date=July 2014 |access-date=30 October 2014}}{{rp|7}} and the Swiss Federal Council{{cite web |publisher=Swiss Confederation |title=Federal Council report on virtual currencies in response to the Schwaab (13.3687) and Weibel (13.4070) postulates |work=Federal Council (Switzerland) |date=25 June 2014 |access-date=28 November 2014 |url=http://www.news.admin.ch/NSBSubscriber/message/attachments/35355.pdf}}{{rp|21}} examined the concerns and came to the conclusion that bitcoin is not a Ponzi scheme. In 2017 billionaire Howard Marks referred to bitcoin as a pyramid scheme.{{cite web|title=This Billionaire Just Called Bitcoin a 'Pyramid Scheme'|url=http://fortune.com/2017/07/27/howard-marks-bitcoin-pyramid-scheme/|access-date=23 September 2017}}

On 12 September 2017, Jamie Dimon, CEO of JPMorgan Chase, called bitcoin a "fraud" and said he would fire anyone in his firm caught trading it. Zero Hedge claimed that the same day Dimon made his statement, JP Morgan also purchased a large amount of bitcoins for its clients.{{cite web|title=JPMorgan Helps Clients Buy Bitcoin Despite CEO Calling Bitcoin 'a Fraud'|url=http://fortune.com/2017/09/18/jpmorgan-buy-bitcoin-ceo-callingfraud/

|access-date=23 September 2017}}

Financial journalists and analysts, economists, and investors have attempted to predict the possible future value of bitcoin. In April 2013, economist John Quiggin stated, "bitcoins will attain their true value of zero sooner or later, but it is impossible to say when". A similar forecast was made in November 2014 by economist Kevin Dowd.{{cite news |author=Kevin Dowd |title=Bitcoin is bust: Why investors should abandon the doomed cryptocurrency |url=http://www.cityam.com/1415215686/bitcoin-bust-why-investors-should-abandon-doomed-cryptocurrency |date=5 November 2014 |access-date=6 November 2014 |work=Opinion |publisher=City A.M.}}

In December 2013, finance professor Mark T. Williams forecast that bitcoin would trade for less than $10 by mid-year 2014.{{cite web |url=http://www.businessinsider.com/williams-bitcoin-meltdown-10-2013-12 |title=FINANCE PROFESSOR: Bitcoin Will Crash To $10 By Mid-2014 |publisher=Business Insider |work=businessinsider.com |date=17 December 2013 |access-date=26 February 2014 |author=Williams, Mark T.}} In the indicated period bitcoin has exchanged as low as $344 (April 2014) and during July 2014 the bitcoin low was $609.{{cite news |work=The Huffington Post |author=Steve H. Hanke |title=Bitcoin Charts, Finally |date=18 September 2014 |access-date=21 November 2014 |url=https://www.huffingtonpost.com/steve-h-hanke/bitcoin-charts_b_5838132.html}} In December 2014, Williams said, "The probability of success is low, but if it does hit, the reward will be very large."{{cite news |title=How Mt. Gox Debacle Won Over a Bitcoin Convert |url=https://www.wsj.com/articles/how-mt-gox-debacle-won-over-a-bitcoin-convert-1417471759 |author=Robin Sidel |date=1 December 2014 |access-date=4 December 2014 |publisher=The Wall Street Journal |work=Markets}}

In November 2014, David Yermack, Professor of Finance at New York University Stern School of Business, forecast that in November 2015 bitcoin may be all but worthless.{{cite news |url=http://www.cnn.com/2014/11/13/tech/bitcoin-peak-price-future |title=Bitcoin: One year on from peak price, what does the future hold? |access-date=15 November 2014 |publisher=CNN |work=Future Finance |date=14 November 2014 |author=Eoghan Macguire}}

In May 2013, Bank of America FX and Rate Strategist David Woo forecast a maximum fair value per bitcoin of $1,300.{{cite news |last=Sharf |first=Samantha |title=Bitcoin Gets Valued: Bank Of America Puts A Price Target On The Virtual Tender |url=https://www.forbes.com/sites/samanthasharf/2013/12/05/bitcoin-gets-valued-bank-of-america-puts-a-price-on-the-virtual-tender/ |work=Forbes |location=New York |date=12 May 2013 |access-date=31 October 2014}} Bitcoin investor Cameron Winklevoss stated in December 2013 that the "small bull case scenario for bitcoin is... 40,000 USD a coin".{{cite news |last=Schroeder |first=Stan |title=Cameron Winklevoss: Bitcoin Might Hit $40,000 Per Coin |url=http://mashable.com/2013/12/16/cameron-winklevoss-bitcoin/ |work=Mashable |location=New York |date=1 December 2013 |access-date=31 October 2014}}

The "death" of bitcoin has been proclaimed numerous times. One journalist has recorded 29 such "obituaries" as of early 2015.{{cite news |author1=Everett Rosenfeld |title=Bitcoin keeps falling, and worries keep rising |url=https://www.cnbc.com/2015/01/14/bitcoin-falls-below-200-making-some-investors-worry-about-downward-spiral.html |access-date=24 January 2015 |publisher=CNBC |date=14 January 2015}}

Forbes magazine declared bitcoin "dead" in June 2011,{{cite news |last1=Worstall |first1=Tim |title=So, That's the End of Bitcoin Then |url=https://www.forbes.com/sites/timworstall/2011/06/20/so-thats-the-end-of-bitcoin-then/ |access-date=18 January 2015 |work=Forbes |date=20 June 2011}} followed by Gizmodo Australia in August 2011.{{cite news |last1=Covert |first1=Adrian |title=The Bitcoin Is Dying. Whatever. |url=http://www.gizmodo.com.au/2011/08/the-bitcoin-is-dying-whatever/ |access-date=18 January 2015 |work=Gizmodo Australia |publisher=Allure Media |date=9 August 2011}} Wired magazine wrote it had "expired" in December 2012.{{cite news |last1=Calore |first1=Michael |title=Wired, Tired, Expired for 2012: From Stellar to Suck |url=https://www.wired.com/2012/12/wired-tired-expired/#slideid-331231 |access-date=18 January 2015 |magazine=Wired |publisher=Condé Nast |date=24 December 2012}} Ouishare Magazine declared, "game over, bitcoin" in May 2013,{{cite news |last1=Jourdan |first1=Stanislas |title=Game over, bitcoin. Where is the next human-based digital currency? |url=http://magazine.ouishare.net/2013/05/bitcoin-human-based-digital-currency/ |access-date=18 January 2015 |work=Ouishare Magazine |date=21 May 2013 |archive-date=19 January 2015 |archive-url=https://web.archive.org/web/20150119204137/http://magazine.ouishare.net/2013/05/bitcoin-human-based-digital-currency |url-status=dead }} and New York Magazine stated bitcoin was "on its path to grave" in June 2013.{{cite news |last1=Roose |first1=Kevin |title=Bitcoin Sees the Grim Reaper |url=https://nymag.com/daily/intelligencer/2013/06/bitcoin-sees-the-grim-reaper.html |access-date=18 January 2015 |work=New York Magazine |publisher=New York Media LLC |date=20 June 2013}} Reuters published an "obituary" for bitcoin in January 2014.{{cite news |last1=Hadas |first1=Edward |title=An early obituary for bitcoin |url=http://blogs.reuters.com/edward-hadas/2014/01/08/an-early-obituary-for-bitcoin/ |archive-url=https://web.archive.org/web/20140111020139/http://blogs.reuters.com/edward-hadas/2014/01/08/an-early-obituary-for-bitcoin/ |url-status=dead |archive-date=11 January 2014 |access-date=18 January 2015 |work=Reuters |date=8 January 2014}} Street Insider declared bitcoin "dead" in February 2014,{{cite news |title=Bitcoin is Dead |url=http://www.streetinsider.com/Analyst+Comments/Bitcoin+is+Dead/9219338.html |access-date=18 January 2015 |publisher=Streetinsider.com |date=26 February 2014}} followed by The Weekly Standard in March 2014,{{cite news |last1=Last |first1=Jonathan V. |title=Bitcoin Is Dead |url=http://www.weeklystandard.com/blogs/bitcoin-dead_784187.html |access-date=18 January 2015 |work=The Weekly Standard |publisher=The Weekly Standard LLC |date=5 March 2014 |archive-date=21 January 2015 |archive-url=https://web.archive.org/web/20150121105541/http://www.weeklystandard.com/blogs/bitcoin-dead_784187.html |url-status=dead }} Salon in March 2014,{{cite news |last1=Leonard |first1=Andrew |title=Sorry, libertarians: Your dream of a Bitcoin paradise is officially dead and gone |url=http://www.salon.com/2014/03/07/sorry_libertarians_your_dream_of_a_bitcoin_paradise_is_officially_dead_and_gone/ |access-date=18 January 2015 |work=Salon |publisher=Salon Media Group Inc. |date=7 March 2014}} Vice News in March 2014,{{cite news |last1=Owen |first1=Taylor |title=Bitcoin Is Dead — Long Live Bitcoin |url=https://www.vice.com/en/article/bitcoin-is-dead-long-live-bitcoin/ |access-date=18 January 2015 |work=Vice News |date=24 March 2014}} and Financial Times in September 2014.{{cite news |last1=Kaminska |first1=Izabella |title=Cult Markets: When the bubble bursts |url=http://ftalphaville.ft.com/2014/09/19/1976132/cult-markets-when-the-bubble-bursts |work=Financial Times |date=19 September 2014}} In January 2015, USA Today stated bitcoin was "headed to the ash heap",{{cite news |last1=Krantz |first1=Matt |title=Bitcoin is headed to the 'ash heap' |url=http://americasmarkets.usatoday.com/2015/01/16/bitcoin-is-headed-to-the-ash-heap/ |access-date=18 January 2015 |work=USA Today |date=16 January 2015 |archive-date=19 January 2015 |archive-url=https://web.archive.org/web/20150119234231/http://americasmarkets.usatoday.com/2015/01/16/bitcoin-is-headed-to-the-ash-heap/ |url-status=dead }} and The Telegraph declared "the end of bitcoin experiment".{{cite news |last1=Sparkes |first1=Matthew |title=Bitcoin might be dead. It doesn't matter. |url=https://www.telegraph.co.uk/technology/news/11347205/Bitcoin-might-be-dead.-It-doesnt-matter..html |access-date=18 January 2015 |work=The Telegraph |date=15 January 2015 |location=London}} In January 2016, former bitcoin developer Mike Hearn called bitcoin a "failed project".{{cite news |last1=Baraniuk |first1=Chris |title=Bitcoin: Is the crypto-currency doomed? |url=https://www.bbc.com/news/technology-35343561 |access-date=19 January 2016 |work=BBC |date=18 January 2016}}

Peter Greenhill, Director of E-Business Development for the Isle of Man, commenting on the obituaries paraphrased Mark Twain saying "reports of bitcoin's death have been greatly exaggerated".{{cite news |last1=Greenhill |first1=Peter |title=Reports of Bitcoin's Death Have Been Greatly Exaggerated |url=http://www.huffingtonpost.co.uk/peter-greenhill/decline-of-bitcoin_b_6976474.html |access-date=5 April 2015 |date=31 March 2015 |work=The Huffington Post}}

Some economists have responded positively to bitcoin while others have expressed skepticism. François R. Velde, Senior Economist at the Chicago Fed, described it as "an elegant solution to the problem of creating a digital currency".{{cite web |url=https://www.chicagofed.org/digital_assets/publications/chicago_fed_letter/2013/cfldecember2013_317.pdf |title=Bitcoin: A primer |date=December 2013 |access-date=3 September 2016 |first=François |last=Velde |work=Chicago Fed letter |issue=317 |page=4 |publisher=Federal Reserve Bank of Chicago}} Paul Krugman and Brad DeLong have found fault with bitcoin, questioning why it should act as a reasonably stable store of value or whether there is a floor on its value.{{cite news |author=Paul Krugman |date=28 December 2013 |title=Bitcoin Is Evil |url=https://krugman.blogs.nytimes.com/2013/12/28/bitcoin-is-evil/ |newspaper=krugman.blogs.nytimes.com |access-date=28 December 2013}} Economist John Quiggin has criticized bitcoin as "the final refutation of the efficient-market hypothesis".

David Andolfatto, Vice President at the Federal Reserve Bank of St. Louis, stated that bitcoin is a threat to the establishment, which he argues is a good thing for the Federal Reserve System and other central banks, because it prompts these institutions to operate sound policies.{{rp|33}}{{cite web |url=http://www.businessinsider.com/interview-with-david-andolfatto-2014-4 |title=St. Louis Fed Economist: Bitcoin Could Be A Good Threat To Central Banks |publisher=Business Insider |work=businessinsider.com |date=6 April 2014 |access-date=16 April 2014 |author=Wile, Rob}}{{cite web |url=http://andolfatto.blogspot.com/2013/12/in-gold-we-trust.html |title=In gold we trust? |publisher=David Andolfatto |work=MacroMania |date=24 December 2013 |access-date=17 April 2014 |quote=Also, note that I am not against gold or bitcoin (or whatever) as a currency. In fact, I think that the threat that they pose as alternate currency can serve as a useful check on a central bank. |author=Andolfatto, David}}

Free software movement activist Richard Stallman has criticized the lack of anonymity and called for reformed development.{{cite news |url=https://www.telegraph.co.uk/technology/news/10488201/Software-activist-calls-for-truly-anonymous-Bitcoins-to-protect-democracy.html |title=Software activist calls for 'truly anonymous' Bitcoins to 'protect democracy' |newspaper=Telegraph |date=2 December 2013 |access-date=27 December 2013 |location=London |first=Matthew |last=Sparkes}} PayPal President David A. Marcus calls bitcoin a "great place to put assets" but claims it will not be a currency until price volatility is reduced.{{cite web |url=http://news.cnet.com/8301-1023_3-57615080-93/paypal-president-david-marcus-bitcoin-is-good-nfc-is-bad/ |title=PayPal president David Marcus: Bitcoin is good, NFC is bad |date=10 December 2013 |access-date=10 December 2013 |first=Stephen |last=Shankland |work=CNET}} Bill Gates, in relation to the cost of moving money from place to place in an interview for Bloomberg L.P. stated: "Bitcoin is exciting because it shows how cheap it can be."{{cite news |date=2 October 2014 |access-date=12 November 2014 |title=Bill Gates: Bitcoin Is Exciting Because It's Cheap |url=https://www.bloomberg.com/video/bill-gates-bitcoin-is-exciting-because-it-s-cheap-dQ4qHV4~TLSnUIuIRfZBVA.html |publisher=Bloomberg L.P.}}

In November 2013, three US government officials testified at senate hearings that "Bitcoin has legitimate uses". According to The Washington Post, "Most of the other witnesses echoed those sentiments."{{cite news |url=https://www.washingtonpost.com/news/the-switch/wp/2013/11/21/heres-how-bitcoin-charmed-washington/# |title=Here's how Bitcoin charmed Washington |date=21 November 2013 |first=Timothy B. |last=Lee |newspaper=The Washington Post |access-date=10 October 2016}}

File:De Waag Bitcoin.jpg in Delft in the Netherlands in 2013]]

Most bitcoin transactions are P2P or take place on a cryptocurrency exchange, rather than being used in transactions with merchants. Delays processing payments through the blockchain of about ten minutes make bitcoin use very difficult in a retail setting, unless the transaction is on layer 2.{{cite web |last1=Neirut |first1=Lisa |title=Bitcoin is a layered cake |url=https://bitlyrics.co/transcripts/bitcoin-is-a-layered-cake/ |website=www.bitlyrics.co |publisher=Bitcoin Conference Transcripts by Bitlyrics |location=Riga, Latvia |date=3 September 2022}} Prices are not usually quoted in units of bitcoin and many trades involve one, or sometimes two, conversions into conventional currencies.{{cite journal |title = Bitcoin: Economics, Technology, and Governance |journal = Journal of Economic Perspectives |volume = 29 |issue = 2 |pages = 213–238 |year = 2015 |author1 = Rainer Böhme |author2 = Nicolas Christin |author3 = Benjamin Edelman |author4 = Tyler Moore |df = dmy-all |doi = 10.1257/jep.29.2.213 |doi-access = free }} Merchants that do accept bitcoin payments may use payment service providers to perform the conversions.{{Cite web|url = http://www.bizjournals.com/atlanta/blog/atlantech/2014/09/atlanta-based-bitpay-hooks-up-with-paypal-to.html|title = Atlanta-based BitPay hooks up with PayPal to expand bitcoin adoption|date = 23 September 2014|website = Atlanta Business Chronicle|last = Karkaria|first = Urvaksh|archive-url = https://web.archive.org/web/20141026224207/http://www.bizjournals.com/atlanta/blog/atlantech/2014/09/atlanta-based-bitpay-hooks-up-with-paypal-to.html|archive-date = 26 October 2014|url-status = live|df = dmy-all}}

In 2017 and 2018 bitcoin's acceptance among major online retailers included only three of the top 500 U.S. online merchants, down from five in 2016.{{cite news |last1=Murphy |first1=Hannah |title=Who really owns bitcoin now? |url=https://www.ft.com/content/29259448-69b3-11e8-b6eb-4acfcfb08c11 |access-date=10 June 2018 |newspaper=Financial Times |date=8 June 2018 |archive-url=https://web.archive.org/web/20180610051316/https://www.ft.com/content/29259448-69b3-11e8-b6eb-4acfcfb08c11 |archive-date=10 June 2018 |url-status=live }} Reasons for this decline include high transaction fees due to bitcoin's scalability issues and long transaction times.{{cite web |url=https://www.bloomberg.com/news/articles/2017-07-12/bitcoin-acceptance-among-retailers-is-low-and-getting-lower |title=Bitcoin Acceptance Among Retailers Is Low and Getting Lower |last=Katz |first=Lily |publisher=Bloomberg |date=12 July 2017 |access-date=25 January 2018 |url-status=live |archive-url=https://web.archive.org/web/20180125204553/https://www.bloomberg.com/news/articles/2017-07-12/bitcoin-acceptance-among-retailers-is-low-and-getting-lower |archive-date=25 January 2018 }}

Bloomberg reported that the largest 17 crypto merchant-processing services handled $69 million in June 2018, down from $411 million in September 2017. Bitcoin is "not actually usable" for retail transactions because of high costs and the inability to process chargebacks, according to Nicholas Weaver, a researcher quoted by Bloomberg. High price volatility and transaction fees make paying for small retail purchases with bitcoin impractical, according to economist Kim Grauer.{{cite news |last1=Kharif |first1=Olga |title=Bitcoin's Use in Commerce Keeps Falling Even as Volatility Eases |url=https://www.bloomberg.com/news/articles/2018-08-01/bitcoin-s-use-in-commerce-keeps-falling-even-as-volatility-eases |access-date=2 August 2018 |publisher=Bloomberg |date=1 August 2018 |archive-url=https://web.archive.org/web/20180802073219/https://www.bloomberg.com/news/articles/2018-08-01/bitcoin-s-use-in-commerce-keeps-falling-even-as-volatility-eases |archive-date=2 August 2018 |url-status=live }}

File:Bitcoin ATM in Vienna.jpg]]

The first recorded sale of a house in exchange for Bitcoin happened in September 2017, when Texas based Kuper Sotheby's International Realty brokered the deal using BitPay to process the payment.{{Cite news|url=https://www.cnbc.com/2018/01/03/heres-the-one-thing-you-need-to-buy-a-house-with-bitcoin.html|title=Here's the one thing you need to buy a house with bitcoin|last1=Elkins |first1= Kathleen|date=3 January 2018|work=CNBC|access-date=4 November 2018|language=en}}

Two months later, a first recorded sale of apartment in the world and first real estate property in Europe was sold for bitcoin in November 2017 in the Czech Republic. The Czech real estate agency HOME Hunters brokered a deal of a three-room apartment for a Russian buyer without using a payment service providers at all.{{Cite news|url=https://www.radio.cz/en/section/business/first-czech-flat-bought-for-cryptocurrency|title=FIRST CZECH FLAT BOUGHT FOR CRYPTOCURRENCY|last1=Fraňková|first1=Ruth|date=21 December 2017|work=Radio Praha|access-date=28 October 2018|language=en}}

Some U.S. political candidates, including New York City Democratic Congressional candidate Jeff Kurzon have said they would accept campaign donations in bitcoin.{{cite news |author1=Jaime Fuller |title=Bring the popcorn — here's our guide to the hottest primaries of the summer |url=https://www.washingtonpost.com/blogs/the-fix/wp/2014/06/16/bring-the-popcorn-heres-our-guide-to-the-hottest-primaries-of-the-summer/ |access-date=8 January 2015 |newspaper=The Washington Post |date=16 June 2014}}

Merchants accepting bitcoin, such as Dish Network, use the services of bitcoin payment service providers such as BitPay or Coinbase. When a customer pays in bitcoin, the payment service provider accepts the bitcoin on behalf of the merchant, directly converts it, and sends the obtained amount to merchant's bank account, charging a fee of less than 1 percent for the service.{{cite news |first1=Gertrude |last1=Chavez-Dreyfuss |first2=Michael |last2=Connor |title=Bitcoin shows staying power as online merchants chase digital sparkle |date=28 August 2014 |work=Reuters |url=https://www.reuters.com/article/us-usa-bitcoin-retailers-analysis-idUSKBN0GS0AG20140828 |access-date=28 August 2014}}

Due to the design of bitcoin, all retail figures are only estimates.{{cite news |last=Orcutt |first=Mike |title=Is Bitcoin Stalling? |url=http://www.technologyreview.com/news/535221/is-bitcoin-stalling/ |access-date=20 February 2015 |newspaper=MIT Technology Review |date=18 February 2015}} According to Tim Swanson, head of business development at a Hong Kong-based cryptocurrency technology company, in 2014, daily retail purchases made with bitcoin were worth about $2.3 million.{{cite news |url=https://www.reuters.com/article/us-markets-bitcoin-adoption-analysis-idUSKBN0JP2CZ20141211 |title=All the rage a year ago, bitcoin sputters as adoption stalls |publisher=Thomson Reuters |work=reuters.com |quote=bitcoin. |date=11 December 2014 |access-date=30 June 2015 |author1=Gertrude Chavez-Dreyfuss |author2=Michael Connor |name-list-style=amp}} MIT Technology review estimates that, {{as of|2015|2|lc=y}}, fewer than 5,000 bitcoins per day (worth roughly $1.2 million at the time) were being used for retail transactions, and concludes that in 2014 "it appears there has been very little if any increase in retail purchases using bitcoin."

Bitcoin companies have had difficulty opening traditional bank accounts because lenders have been leery of bitcoin's links to illicit activity.{{cite news |author1=Robin Sidel |title=Banks Mostly Avoid Providing Bitcoin Services |url=https://www.wsj.com/articles/SB10001424052702304202204579252850121034702 |access-date=27 December 2014 |publisher=The Wall Street Journal |date=22 December 2013}} According to Antonio Gallippi, a co-founder of BitPay, "banks are scared to deal with bitcoin companies, even if they really want to".{{cite news |url=https://www.bloomberg.com/news/2013-12-05/bitcoin-skepticism-by-bankers-from-china-to-u-s-hinders-growth.html |title=Bankers Balking at Bitcoin in U.S. as Real-World Obstacles Mount |publisher=Bloomberg |work=bloomberg.com |date=5 December 2013 |access-date=16 April 2014 |author=Dougherty, Carter}} In 2014, the National Australia Bank closed accounts of businesses with ties to bitcoin,{{cite web |url=https://www.theguardian.com/world/2014/apr/10/bitcoin-dumped-by-national-australia-bank-as-too-risky |title=Bitcoin firms dumped by National Australia Bank as 'too risky' |publisher=The Guardian |work=Australian Associated Press|date=10 April 2014 |access-date=23 February 2015}} and HSBC refused to serve a hedge fund with links to bitcoin.{{cite web |url=https://www.bbc.com/news/world-europe-jersey-30261976 |title=HSBC severs links with firm behind Bitcoin fund |publisher=BBC |work=bbc.com |date=1 December 2014 |access-date=9 January 2015 |author=Weir, Mike}} Australian banks in general have been reported as closing down bank accounts of operators of businesses involving the currency;{{Cite web |title=ACCC investigating why banks are closing bitcoin companies' accounts |url=http://www.afr.com/technology/accc-investigating-why-banks-are-closing-bitcoin-companies-accounts-20151018-gkc5iv |website=Financial Review|date=19 October 2015 |access-date = 28 January 2016 |language=en-US}} this has become the subject of an investigation by the Australian Competition & Consumer Commission. Nonetheless, Australian banks have adopted the blockchain technology on which bitcoin is based.{{Cite web |title=CBA tests blockchain trading with 10 global banks |url=https://www.smh.com.au/business/banking-and-finance/commonwealth-bank-of-australia-tests-blockchain-trading-with-10-global-banks-20160120-gmalvp.html |website=Sydney Morning Herald|date=21 January 2016 |access-date = 28 January 2016}}

In September 2019 the Central Bank of Venezuela, at the request of PDVSA, ran tests to determine if bitcoin and Ethereum could be held in central bank's reserves. The request was motivated by oil company's goal to pay its suppliers.{{cite news |title=Venezuela Has Bitcoin Stash and Doesn't Know What to Do With It|url=https://www.bloomberg.com/news/articles/2019-09-26/venezuela-has-bitcoin-stash-and-doesn-t-know-what-to-do-with-it |access-date=26 September 2019 |work=Bloomberg |date=26 September 2019}}

Some Argentinians have bought bitcoins to protect their savings against high inflation or the possibility that governments could confiscate savings accounts.{{cite news |url=https://www.washingtonpost.com/blogs/the-switch/wp/2013/08/21/five-surprising-facts-about-bitcoin-2/ |title=Five surprising facts about Bitcoin |newspaper=The Washington Post |date=21 August 2013 |access-date=2 April 2014 |author=Lee, Timothy}} During the 2012–2013 Cypriot financial crisis, bitcoin purchases in Cyprus rose due to fears that savings accounts would be confiscated or taxed.{{cite news |last=Salyer |first=Kirsten |title=Fleeing the Euro for Bitcoins |url=https://www.bloomberg.com/news/2013-03-20/fleeing-the-euro-for-bitcoins-.html |publisher=Bloomberg News|date=20 March 2013 |access-date=31 October 2014 }}

Other methods of investment are bitcoin funds. The first regulated bitcoin fund was established in Jersey in July 2014 and approved by the Jersey Financial Services Commission.{{cite news |title=Jersey approve Bitcoin fund launch on island |url=https://www.bbc.com/news/world-europe-jersey-28247796 |date=10 July 2014 |access-date=10 July 2014 |work=BBC News}} Also, c. 2012 an attempt was made by Cameron and Tyler Winklevoss (who in April 2013 claimed they owned nearly 1% of all bitcoins in existence{{cite news |title=Never Mind Facebook; Winklevoss Twins Rule in Digital Money |author1=Nathaniel Popper |author2=Peter Lattman |name-list-style=amp |url=https://dealbook.nytimes.com/2013/04/11/as-big-investors-emerge-bitcoin-gets-ready-for-its-close-up/ |work=The New York Times |date=11 April 2013 |access-date=31 October 2014}}) to establish a bitcoin ETF.{{cite news |url=https://blogs.wsj.com/moneybeat/2013/07/02/beware-the-risks-of-the-bitcoin-winklevii-outline-the-downside/ |title=Beware the Risks of the Bitcoin: Winklevii Outline the Downside |publisher=The Wall Street Journal |work=Moneybeat |date=2 July 2013 |access-date=21 October 2013 |author=Grocer, Stephen}} As of 10 March 2017 the bitcoin ETF was declined by the SEC because of regulatory concerns. The price fell 15% in a few minutes, but soon mostly recovered.{{cite news|last1=Popper|first1=Nathaniel|title=S.E.C. Rejects Winklevoss Brothers' Bid to Create Bitcoin E.T.F.|url=https://www.nytimes.com/2017/03/10/business/dealbook/winkelvoss-brothers-bid-to-create-a-bitcoin-etf-is-rejected.html|access-date=12 March 2017|work=The New York Times|date=10 March 2017 }} As of early 2015, they have announced plans to launch a New York-based bitcoin exchange named Gemini,{{cite news |url=https://dealbook.nytimes.com/2015/01/22/winklevoss-twins-aim-to-take-bitcoin-mainstream-with-a-regulated-exchange/?_r=0 |title=Winklevoss Twins aim to take Bitcoin Mainstream |publisher=The New York Times |work=Dealbook blog |date=23 January 2015 |access-date=15 February 2015 |author1=Popper, N. |author2=Ember, S. |name-list-style=amp}} which has received approval to launch on 5 October 2015.{{cite news |last1=Tepper |first1=Fitz |title=Winklevoss Twins Receive Approval To Launch Bitcoin Exchange Gemini |url=https://techcrunch.com/2015/10/05/winklevoss-twins-receive-approval-to-launch-bitcoin-exchange-gemini/ |access-date=22 November 2015 |work=TechCrunch |date=5 October 2015}} On 4 May 2015, Bitcoin Investment Trust started trading on the OTCQX market as GBTC.{{cite news |last1=Curran |first1=Rob |title=A Bitcoin Fund Is Born, With Teething Pains |url=https://www.wsj.com/articles/a-bitcoin-fund-is-born-with-teething-painsa-bitcoin-fund-is-born-with-teething-pains-1435601798 |access-date=22 November 2015 |work=Markets |publisher=The Wall Street Journal |date=6 July 2015}}

In 2013 and 2014, the European Banking Authority{{cite web |url=http://www.eba.europa.eu/documents/10180/16136/EBA+Warning+on+Virtual+Currencies.pdf |archive-url=https://web.archive.org/web/20131228224508/http://www.eba.europa.eu/documents/10180/16136/EBA+Warning+on+Virtual+Currencies.pdf |archive-date=28 December 2013 |title=Warning to consumers on virtual currencies |publisher=European Banking Authority |date=12 December 2013 |access-date=23 December 2013 |url-status=dead |df=dmy }} and the Financial Industry Regulatory Authority (FINRA), a United States self-regulatory organization,{{cite news |url=https://www.reuters.com/article/us-bitcoin-finra-idUSBREA2A1OJ20140311 |title=Beware Bitcoin: U.S. brokerage regulator. |author=Jonathan Stempel |date=11 March 2014 |access-date=14 March 2014 |publisher=reuters.com}} warned that investing in bitcoins carries significant risks. Forbes named bitcoin the best investment of 2013.{{Cite news |url=https://www.forbes.com/sites/kashmirhill/2013/12/26/how-you-should-have-spent-100-in-2013-hint-bitcoin/ |title=How You Should Have Spent $100 In 2013 (Hint: Bitcoin) |last=Hill |first=Kashmir |work=Forbes|access-date = 16 February 2015}} In 2014, Bloomberg named bitcoin one of its worst investments of the year.{{cite news |url=https://www.bloomberg.com/news/2014-12-22/the-best-and-worst-investments-of-2014.html |title=The Best and Worst Investments of 2014 |publisher=Bloomberg LP |work=bloomberg.com |date=23 December 2014 |access-date=9 January 2015 |author=Steverman, Ben}} In 2015, bitcoin topped Bloomberg's currency tables.{{cite news |last1=Gilbert |first1=Mark |title=Bitcoin Won 2015. Apple ... Did Not |url=http://www.bloombergview.com/articles/2015-12-29/bitcoin-won-in-2015-but-apple-lost-big |access-date=29 December 2015 |publisher=Bloomberg |date=29 December 2015}}

To improve access to price information and increase transparency, on 30 April 2014 Bloomberg LP announced plans to list prices from bitcoin companies Kraken and Coinbase on its 320,000 subscription financial data terminals.{{cite news |title=Bloomberg to List Bitcoin Prices, Offering Key Stamp of Approval |url=https://www.wsj.com/news/articles/SB10001424052702304893404579532471795644350?mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702304893404579532471795644350.html |access-date=23 March 2015 |newspaper=WSJ |date=30 April 2014 |author=Michael J. Casey}}{{cite news |title=Bloomberg terminal now following bitcoin prices |url=https://www.cnbc.com/2014/04/30/bloomberg-now-tracking-bitcoin-price.html |access-date=23 March 2015 |date=30 April 2014 |author=CNBC}} In May 2015, Intercontinental Exchange Inc., parent company of the New York Stock Exchange, announced a bitcoin index initially based on data from Coinbase transactions.{{cite web |url=http://www.businesswire.com/news/home/20150519005701/en#.VV-cNkhM6HD |title=NYSE to Launch NYSE Bitcoin Index, NYXBT |publisher=Business Wire |work=businesswire.com |date=19 May 2015 |access-date=22 May 2015}}

According to Bloomberg, in 2013 there were about 250 bitcoin wallets with more than $1 million worth of bitcoins. The number of bitcoin millionaires is uncertain as people can have more than one wallet.{{cite news|url=https://www.bloomberg.com/news/articles/2013-04-10/meet-the-bitcoin-millionaires|title=Meet the Bitcoin Millionaires|newspaper=Bloomberg.com |date=12 April 2013|via=www.bloomberg.com}}

Venture capitalists, such as Peter Thiel's Founders Fund, which invested {{currency|3|USD}} million in BitPay, do not purchase bitcoins themselves, instead funding bitcoin infrastructure like companies that provide payment systems to merchants, exchanges, wallet services, etc.{{cite news |url=http://www.technologyreview.com/news/515391/bitcoin-millionaires-become-investing-angels/ |title=Bitcoin Millionaires Become Investing Angels |work=Computing News |publisher=MIT Technology Review |date=12 June 2013 |access-date=13 June 2013 |author=Simonite, Tom |archive-date=14 June 2013 |archive-url=https://web.archive.org/web/20130614032358/http://www.technologyreview.com/news/515391/bitcoin-millionaires-become-investing-angels/ |url-status=dead }} In 2012, an incubator for bitcoin-focused start-ups was founded by Adam Draper, with financing help from his father, venture capitalist Tim Draper, one of the largest bitcoin holders after winning an auction of 30,000 bitcoins,{{cite news |author1=Robin Sidel |title=Ten-hut! Bitcoin Recruits Snap To |url=https://www.wsj.com/news/articles/SB21659981523255993497704580305120918936264?mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB21659981523255993497704580305120918936264.html |access-date=9 December 2014 |work=The Wall Street Journal |publisher=Dow Jones & Company |date=1 December 2014 |archive-date=27 February 2015 |archive-url=https://web.archive.org/web/20150227214546/http://www.wsj.com/news/articles/SB21659981523255993497704580305120918936264?mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB21659981523255993497704580305120918936264.html |url-status=dead }} at the time called 'mystery buyer'.{{cite news |title=Silk Road's legacy 30,000 bitcoin sold at auction to mystery buyers |author=Alex Hern |url=https://www.theguardian.com/technology/2014/jul/01/silk-road-bitcoin-auction |newspaper=The Guardian |date=1 July 2014 |access-date=31 October 2014}} The company's goal is to fund 100 bitcoin businesses within 2–3 years with $10,000 to $20,000 for a 6% stake. Investors also invest in bitcoin mining.{{cite news |url=http://www.redherring.com/finance/coinseed-raises-7-5m-invests-5m-in-bitcoin-mining-hardware-investment-round-up/ |title=CoinSeed raises $7.5m, invests $5m in Bitcoin mining hardware – Investment Round Up |work=Red Herring |date=24 January 2014 |access-date=9 March 2014}}

Bitcoin is useful for crowdfunding. For example, one college football sign netted over $20,000 in donations for a bitcoin enthusiast. He was shown by local TV company with a broadsheet "Hi mom, send bitcoins".{{cite news|last1=Robertson|first1=Adi|title=One college football sign netted over $20,000 in donations for a Bitcoin enthusiast|url=https://www.theverge.com/2013/12/1/5163926/one-college-football-sign-netted-22-bitcoins-for-enthusiast|access-date=17 August 2017|work=The Verge|date=1 December 2013}}

This list is not exhaustive:

• Satoshi Nakamoto believers estimate that he owns over a million of Bitcoins

Bitcoin holdings estimates cryptonary.comnowevent.cotreasuries.bitbo.io

• 530k-600k United States
• 430k Microstrategy
• 300k North Korea
• 300k Iran
• 194k-200k China
• 100k-120k Russia
• 64k-65k United Kingdom
• 45k-46k Ukraine
• 30k Tim Draper
• 16k Riot Platforms
• 13k Bhutan
• 10k Tesla
• 6k Salvadorhttps://www.wsj.com/world/americas/el-salvador-made-bitcoin-an-official-currency-now-its-backtracking-for-imf-loan-874c6623
• 5k GameStophttps://www.reuters.com/business/gamestop-buys-bitcoin-worth-513-million-crypto-push-2025-05-28/
• 2k Finland

{{see also|Bitcoin and politics}}

The decentralization of money offered by virtual currencies like bitcoin has its theoretical roots in the Austrian school of economics such as subjective theory of value.{{citation needed|date=November 2023}}

According to Doug Henwood, writing for The Nation in 2014, Bitcoin is relatively popular among right-wing libertarians for similar reasons to gold, due to their perceived ability to disrupt institutional banking and deflationary nature.{{cite news |url=http://www.thenation.com/article/179620/bitcoin-future-money?page=full |title=Bitcoin the Future of Money? |author=Doug Henwood |date=19 May 2014 |publisher=The Nation.com |access-date=12 September 2014}}

According to alternative-finance blogger Brett Scott, writing E-International Relations "Those with a left-wing anarchist bent, who perceive the state and banking sector as representing the same elite interests, may recognise in [bitcoin] the potential for collective direct democratic governance of currency. It has really appealed, though, to conservative libertarians who perceive it as a commodity-like currency, free from the evils of the central bank and regulation."{{cite web |url=http://www.e-ir.info/2014/06/01/visions-of-a-techno-leviathan-the-politics-of-the-bitcoin-blockchain/ |title=Visions of a Techno-Leviathan: The Politics of the Bitcoin Blockchain |author=Brett Scott |date=1 June 2014 |work=E-International Relations |access-date=31 October 2014}} Columnist Edward Hadas said in 2013 that the appeal of bitcoin is in part political. Hadas opined that Friedrich Hayek likely would've approved of bitcoin, but that the right-wing libertarian view of private currency is "simply wrong" and based on a misunderstanding of both economics and history.{{cite news |url=http://www.breakingviews.com/edward-hadas-bitcoin-is-a-step-back-not-forward/21121998.article |title=Right-wing dreams |author=Edward Hadas |date=27 November 2013 |publisher=Thomson Reuters |access-date=31 October 2014 |archive-date=4 March 2016 |archive-url=https://web.archive.org/web/20160304135604/http://www.breakingviews.com/edward-hadas-bitcoin-is-a-step-back-not-forward/21121998.article |url-status=dead }}

Journalists Paul Vigna and Michael Casey, in their 2015 book The Age of Cryptocurrency, described the libertarian view of bitcoin as closer to metallism, the economic philosophy that views money as a commodity, while they predicted that a larger influence on bitcoin would come from bitcoin's use as a disruptive payment system, which they equate to chartalism.{{cite news |author1=Staff |title=Much more than digital cash |url=https://www.economist.com/news/business-books-quarterly/21638093-rise-and-fall-crypto-currency-good-news-authors-least-much |access-date=13 January 2015 |newspaper=The Economist |publisher=The Economist Newspaper Ltd |date=10 January 2015}}{{cite book |last1=Vigna |first1=Paul |last2=Casey |first2=Michael |title=The age of cryptocurrency: how bitcoin and digital money are challenging the global economic order |date=2015 |publisher=St. Martin's Press |location=New York, NY |isbn=9781250065636 |edition=1.|oclc=893784026}}

• Cryptoeconomics

{{Notelist|30em}}

• Halaburda, Hanna, Guillaume Haeringer, Joshua Gans, and Neil Gandal. 2022. "[https://www.aeaweb.org/articles?id=10.1257/jel.20201593 The Microeconomics of Cryptocurrencies]." Journal of Economic Literature, 60 (3): 971–1013.

{{Reflist|30em}}

{{Bitcoin|state=expanded}}

Category:Bitcoin

bitcoin

Category:Interdisciplinary subfields of economics