What Makes Bitcoin Special? An Economist Explains

Whether bitcoin is just a fad or could catch on for widespread use in everyday exchanges is a subject of much debate. Luther, for his part, points out that it already can be used in many exchanges.

“You can buy a new couch on Overstock.com,” he says. “You can pay your AT&T wireless bill. Tell me what you are looking for and there is a good chance someone is out there ready to sell it for bitcoin. That it is not more commonly used, despite many retailers willing to accept it, suggests that it is not well suited for many transactions.”

“Bitcoin is very well suited for making cross-border payments,” Luther continued. “It is well suited for making private transactions. But few of the transactions I make in the course of a month involve cross border payments or require more privacy than is afforded by my bank. So I don’t spend bitcoin very often. I suspect other people make a similar calculation. That’s not a knock on bitcoin. It is just to acknowledge that it tends to function as a niche money at present, and seems likely to do so into the foreseeable future.”

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