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Abstract

The purpose of this paper is to examine in what ways capital-B Bitcoin, the system, and lower-b bitcoin, the unit of account, are or are not money. Bitcoin is the largest, by market capitalization, financial asset labeled "cryptocurrency" and the first decentralized digital currency. The paper canvasses the academic, business and technical literature to scrutinize the validity of this neologism's implied equivalency to money as a concept, system and artifact from historical, economic, political, teleological, theoretical and functional perspectives. The author(s) of Bitcoin invented blockchain, that is a shared, decentralized, time stamped, public ledger, to solve the problem of double spending. The risk of fraud, paying several counterparties with the same coin, was an intractable limitation on digital cash replacing paper money. The addition of blockchain to "proof of work" and advanced cryptography was a major advance in electronic cash systems. The combination of other features with this innovation, in particular a programmed steady growth and overall limit on supply, created in Bitcoin and other cryptocurrencies that followed a potential challenger to fiat currencies. This paper tests Bitcoin's progress and prospects in credibly replacing sovereign currencies in theory and in practice. Our conclusion is that the replacement of fiat currencies by cryptocurrencies in the world economy is not imminent. However, the underlying technology of cryptocurrencies holds great promise for improving the security and efficiency of the global financial and monetary systems.

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