Economic Efficiency of Cryptocurrencies: Model of Bitcoin

Abstract

Cryptocurrency is considered a significant financial ground-breaking financial product which has led to a new revolution in financial market, affecting many countries and institutions globally, in both the economic and regulatory level. The huge impact of its existence can be seen by the enormous volume of borderless transactions, which occasionally overwhelming the economic size of some countries. The objective of this article is thus, to explore the reality of cryptocurrency focusing on Bitcoin as a case study. Besides, the article also aims to measure the efficiency of the currency technically and economically as to make assumptions on the probable impacts should it happen that the currency is adopted in main stream monetary system. Eventually, the article concludes that the adoption of the currency (bitcoin) may lead to inefficiency of the economy due to its nature of being overly exposed to the volatile market forces without any supervision. The adverse economic condition such as the risk of piracy and loss of rights, can also be expected as until currently there is no legal jurisdiction that guarantees the rights, apart of the presence of in the currency itself