“Bitcoin is Memory”

Bitcoin has been one of the most talked about talked topics over the past year. Despite of this there is relatively little economic research that has been done on the topic so far. However, a new working paper by William Luther and Josiah Olson add important insight to the economics of bitcoin.

This is the abstract for Luther and Olson’s paper “Bitcoin is Memory”:

“We maintain that the crypto-currency bitcoin is a practical application of what is termed “memory” in the monetary economics literature. After reviewing the theoretical literature on money and memory, we offer a brief overview of the bitcoin protocol and argue that, like memory, bitcoin functions as a public record-keeping device. Finally, we provide evidence that — in line with the standard theoretical account of memory — bitcoin use has soared as the expected cost of storing traditional monies increased.”

Have a look and let me hear what you think of Will and Josiah’s paper.

Will is telling me that he and Josiah have more in the pipeline. I will look forward to that – Will never disappoints writing interesting stuff.


Is Bernanke pulling Greece out of the crisis?

For the first time in a couple of weeks I have felt kind of optimistic today. It might actually be that the Federal Reserve and the Bank of Japan will not repeat the mistakes of 1937 – at least I am hopefully we have learned something from 1937.

So I think we need an optimistic graph for the weekend. Take a look atthe  European Commission’s Sentiment Indicator for the Greek economy. The rebound since September – when the Federal Reserve effectively announced the Evans rule – has truly been remarkable.

 Bernanke Greece

Of course this might also be the impact of Draghi’s comment that he would do “whatever it takes” to save the euro (in July) or the combinded efforts of Prime Minister Abe and BoJ chief Kuroda to get Japan out of the deflationary trap.

It could of course also be that years of austerity are finally paying off, but I find that to be extremely unlikely. Not matter what this is probably the most positive graph we have seen on the Greek economy in years. Lets hope for the sake of the Greek people and the European economy that there will be a lot more graphs like that in the future.

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