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Bitcoin: A solution for payment systems or a solution in search of a problem?

Author

Listed:
  • Carlos Conesa

    (Banco de España)

Abstract

In October 2008 a mysterious article was published under the pseudonym Satoshi Nakamoto: “Bitcoin: a peer-to-peer electronic cash system”. Bitcoin’s entry into operation some months later in early 2009 barely caused a ripple. Since then, the scheme has accumulated more than half a million blocks in its blockchain and they include more than 300 million transactions. In view of the media impact of Bitcoin, it is worth explaining in some detail how Bitcoin works and what its limitations are. This article reviews the aims and basic functioning of Bitcoin, analyses its strengths and weaknesses, and discusses its usefulness as an exchange mechanism.

Suggested Citation

  • Carlos Conesa, 2019. "Bitcoin: A solution for payment systems or a solution in search of a problem?," Occasional Papers 1901, Banco de España.
    • Handle: RePEc:bde:opaper:1901
    as

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    File URL: https://www.bde.es/f/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosOcasionales/19/Files/do1901e.pdf
    File Function: First version, February 2019
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    References listed on IDEAS

    as
    1. Olympia Bover & Enrique Coronado & Pilar Velilla, 2014. "The Spanish survey of household finances (EFF): description and methods of the 2011 wave," Occasional Papers 1407, Banco de España.
    2. Olympia Bover & Laura Crespo & Carlos Gento & Ismael Moreno, 2018. "The Spanish survey of household finances (EFF): Description and methods of the 2014 wave," Occasional Papers 1804, Banco de España.
    3. Olympia Bover, 2011. "The Spanish survey of household finances (eff): description and methods of the 2008 wave," Occasional Papers 1103, Banco de España.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    blockchain; hash function; bitcoin; cryptoassets; cryptography; innovation; technology.;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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