According to the director of the Institute for Money, Technology and Financial Inclusion at the University of California-Irvine there is "an unsettled debate about whether bitcoin is a currency". Bitcoin is commonly referred to with terms like: digital currency, digital cash, virtual currency, electronic currency, or cryptocurrency. Its inventor, Satoshi Nakamoto, used the term electronic cash. Bitcoins have three useful qualities in a currency, according to the Economist in January 2015: they are "hard to earn, limited in supply and easy to verify". Economists define money as a store of value, a medium of exchange, and a unit of account and agree that bitcoin has some way to go to meet all these criteria. It does best as a medium of exchange. The bitcoin market currently suffers from volatility, limiting the ability of bitcoin to act as a stable store of value, and retailers accepting bitcoin use other currencies as their principal unit of account.

Journalists and academics also dispute what to call bitcoin. Some media outlets do make a distinction between "real" money and bitcoins, while others call bitcoin real money. The Wall Street Journal declared it a commodity in December 2013. A Forbes journalist referred to it as digital collectible. Two University of Amsterdam computer scientists proposed the term "money-like informational commodity". In addition to that, The Wall Street Journal, Wired, Daily Mail Australia, Forbes, and Business Wire used the digital asset classification for bitcoin.

In a 21 September 2015 press release, the US Commodity Futures Trading Commission (CFTC) declared bitcoin to be a commodity covered by the Commodity Exchange Act.
The People's Bank of China has stated that bitcoin "is fundamentally not a currency but an investment target".

Buying and selling

Bitcoins can be bought and sold both on- and offline. Participants in online exchanges offer bitcoin buy and sell bids. Using an online exchange to obtain bitcoins entails some risk, and, according to a study published in April 2013, 45% of exchanges fail and take client bitcoins with them. Exchanges have since implemented measures to provide proof of reserves in an effort to convey transparency to users. Offline, bitcoins may be purchased directly from an individual or at a bitcoin ATM.

Price and volatility

According to Mark T. Williams, as of 2014, bitcoin has volatility seven times greater than gold, eight times greater than the S&P 500, and eighteen times greater than the U.S. dollar.

Attempting to explain the high volatility, a group of Japanese scholars stated that there is no stabilization mechanism. The Bitcoin Foundation contends that high volatility is due to insufficient liquidity, while a Forbes journalist claims that it is related to the uncertainty of its long-term value, and the high volatility of a startup currency makes sense, "because people are still experimenting with the currency to figure out how useful it is." There are uses where volatility does not matter, such as online gambling, tipping, and international remittances. As of 2014, pro-bitcoin venture capitalists argued that the greatly increased trading volume that planned high-frequency trading exchanges would generate is needed to decrease price volatility.

On 4 November 2015, bitcoin had risen by more than 20%, exceeding $490. The Financial Times associated the rapid growth with the popularity of "socio-financial networks" MMM operated by Russian businessman Sergei Mavrodi.
The price of bitcoins has gone through various cycles of appreciation and depreciation referred to by some as bubbles and busts. In 2011, the value of one bitcoin rapidly rose from about US$0.30 to US$32 before returning to US$2. In the latter half of 2012 and during the 2012–13 Cypriot financial crisis, the bitcoin price began to rise, reaching a high of US$266 on 10 April 2013, before crashing to around US$50. On 29 November 2013, the cost of one bitcoin rose to the all-time peak of US$1,242. In 2014, the price fell sharply, and as of April remained depressed at little more than half 2013 prices. As of August 2014 it was under US$600. In January 2015, noting that the bitcoin price had dropped to its lowest level since spring 2013 – around US$224 – The New York Times suggested that "with no signs of a rally in the offing, the industry is bracing for the effects of a prolonged decline in prices. In particular, bitcoin mining companies, which are essential to the currency’s underlying technology, are flashing warning signs." Also in January 2015, Business Insider reported that deep web drug dealers were "freaking out" as they lost profits through being unable to convert bitcoin revenue to cash quickly enough as the price declined – and that there was a danger that dealers selling reserves to stay in business might force the bitcoin price down further.

Speculative bubble dispute

Bitcoin has been labelled a speculative bubble by many including former Fed Chairman Alan Greenspan and economist John Quiggin. Nobel Memorial Prize laureate Robert Shiller said that bitcoin "exhibited many of the characteristics of a speculative bubble". Two lead software developers of bitcoin, Gavin Andresen and Mike Hearn, have warned that bubbles may occur. David Andolfatto, a vice president at the Federal Reserve Bank of St. Louis, stated, "Is bitcoin a bubble? Yes, if bubble is defined as a liquidity premium." According to Andolfatto, the price of bitcoin "consists purely of a bubble," but he concedes that many assets have prices that are greater than their intrinsic value. Journalist Matthew Boesler rejects the speculative bubble label and sees bitcoin's quick rise in price as nothing more than normal economic forces at work. The Washington Post pointed out that the observed cycles of appreciation and depreciation don't correspond to the definition of speculative bubble.

Ponzi scheme dispute

A transaction must have one or more inputs. For the transaction to be valid, every input must be an unspent output of a previous transaction. Every input must be digitally signed. The use of multiple inputs corresponds to the use of multiple coins in a cash transaction. A transaction can also have multiple outputs, allowing one to make multiple payments in one go. A transaction output can be specified as an arbitrary multiple of satoshi. As in a cash transaction, the sum of inputs (coins used to pay) can exceed the intended sum of payments. In such case, an additional output is used, returning the change back to the payer. Any input satoshis not accounted for in the transaction outputs become the transaction fee.

To send money to a bitcoin address, users can click links on webpages; this is accomplished with a provisional bitcoin URI scheme using a template registered with IANA. Bitcoin clients like Electrum and Armory support bitcoin URIs. Mobile clients recognize bitcoin URIs in QR codes, so that the user does not have to type the bitcoin address and amount in manually. The QR code is generated from the user input based on the payment amount. The QR code is displayed on the mobile device screen and can be scanned by a second mobile device.

Value forecasts

Financial journalists and analysts, economists, and investors have attempted to predict the possible future value of bitcoin. In April 2013, economist John Quiggin stated, "bitcoins will attain their true value of zero sooner or later, but it is impossible to say when". A similar forecast was made in November 2014 by economist Kevin Dowd. In November 2014, David Yermack, Professor of Finance at New York University Stern School of Business, forecast that in November 2015 bitcoin may be all but worthless. In the indicated period bitcoin has exchanged as low as $176.50 (January 2015) and during November 2015 the bitcoin low was $309.90. In December 2013, teacher Mark T. Williams forecast a bitcoin would be worth less than $10 by July 2014. In the indicated period bitcoin has exchanged as low as $344 (April 2014) and during July 2014 the bitcoin low was $609. In December 2014, Williams said, "The probability of success is low, but if it does hit, the reward will be very large." In May 2013, Bank of America FX and Rate Strategist David Woo forecast a maximum fair value per bitcoin of $1,300. Bitcoin investor Cameron Winklevoss stated in December 2013 that the "small bull case scenario for bitcoin is... 40,000 USD a coin".


The "death" of bitcoin has been proclaimed numerous times One journalist has recorded 29 such "obituaries" as of early 2015. Forbes magazine declared bitcoin "dead" in June 2011, followed by Gizmodo Australia in August 2011. Wired magazine wrote it had "expired" in December 2012, Ouishare Magazine declared, "game over, bitcoin" in May 2013, and New York Magazine stated bitcoin was "on its path to grave" in June 2013. Reuters published an "obituary" for bitcoin in January 2014 Street Insider declared bitcoin "dead" in February 2014, as did The Weekly Standard in March 2014, followed by Salon in March 2014, and Vice News in March 2014, then the Financial Times in September 2014. In January 2015, USA Today states bitcoin was "headed to the ash heap", and The Telegraph declared "the end of bitcoin experiment". In January 2016, former bitcoin developer Mike Hearn called bitcoin a "failed project". Peter Greenhill, Director of E-Business Development for the Isle of Man, commenting on the obituaries paraphrased Mark Twain saying "reports of bitcoin's death have been greatly exaggerated".


Some economists have responded positively to bitcoin while others have expressed skepticism. François R. Velde, Senior Economist at the Chicago Fed described it as "an elegant solution to the problem of creating a digital currency". Paul Krugman and Brad DeLong have found fault with bitcoin questioning why it should act as a reasonably stable store of value or whether there is a floor on its value. Economist John Quiggin has criticized bitcoin as "the final refutation of the efficient-market hypothesis".

David Andolfatto, Vice President at the Federal Reserve Bank of St. Louis, stated that bitcoin is a threat to the establishment, which he argues is a good thing for the Federal Reserve System and other central banks because it prompts these institutions to operate sound policies.

Free software movement activist Richard Stallman has criticized the lack of anonymity and called for reformed development. PayPal President David A. Marcus calls bitcoin a "great place to put assets" but claims it will not be a currency until price volatility is reduced. Bill Gates, in relation to the cost of moving money from place to place in an interview for Bloomberg L.P. stated: "Bitcoin is exciting because it shows how cheap it can be." Similarly, Peter Schiff, a bitcoin sceptic understands "the value of the technology as a payment platform" and his Euro Pacific Precious Metals fund partnered with in May 2014, because "a wire transfer of fiat funds can be slow and expensive for the customer".

Officials in countries such as Brazil, the Isle of Man, Jersey, the United Kingdom, and the United States have recognized its ability to provide legitimate financial services. Recent bitcoin developments have been drawing the interest of more financially savvy politicians and legislators as a result of bitcoin's capability to eradicate fraud, simplify transactions, and provide transparency, when bitcoins are properly utilized. Acceptance by merchants

In 2015, the number of merchants accepting bitcoin exceeded 100,000. As of December 2014 select firms that accept payments in bitcoin include:

Acceptance by nonprofits

Organizations accepting donations in bitcoin include: The Electronic Frontier Foundation, Greenpeace, The Mozilla Foundation, and The Wikimedia Foundation. Some U.S. political candidates, including New York City Democratic Congressional candidate Jeff Kurzon have said they would accept campaign donations in bitcoin. In late 2013 the University of Nicosia became the first university in the world to accept bitcoins. Use in retail transactions

Due to the design of bitcoin, all retail figures are only estimates. According to Tim Swanson, head of business development at a Hong Kong-based cryptocurrency technology company, in 2014, daily retail purchases made with bitcoin were worth about $2.3 million. He estimates that, as of February 2015, fewer than 5,000 bitcoins per day (worth roughly $1.2 million at the time) were being used for retail transactions, and concluded that in 2014 "it appears there has been very little if any increase in retail purchases using bitcoin."

Financial institutions

Bitcoin companies have had difficulty opening traditional bank accounts because lenders have been leery of bitcoin's links to illicit activity. According to Antonio Gallippi, a co-founder of BitPay, "banks are scared to deal with bitcoin companies, even if they really want to". In 2014, the National Australia Bank closed accounts of businesses with ties to bitcoin, and HSBC refused to serve a hedge fund with links to bitcoin. Australian banks in general have been reported as closing down bank accounts of operators of businesses involving the currency; this has become the subject of an investigation by the Australian Competition and Consumer Commission. Nonetheless, Australian banks have keenly adopted the block chain technology on which bitcoin is based. The outcome of any ACCC investigation is yet to be announced.

In a 2013 report, Bank of America Merrill Lynch stated that "we believe bitcoin can become a major means of payment for e-commerce and may emerge as a serious competitor to traditional money-transfer providers." In June 2014, the first bank that converts deposits in currencies instantly to bitcoin without any fees was opened in Boston.

Venture capital

Venture capitalists, such as Peter Thiel's Founders Fund, which invested US$3 million in BitPay, do not purchase bitcoins themselves, instead funding bitcoin infrastructure like companies that provide payment systems to merchants, exchanges, wallet services, etc. In 2012, an incubator for bitcoin-focused start-ups was founded by Adam Draper, with financing help from his father, venture capitalist Tim Draper, one of the largest bitcoin holders after winning an auction of 30,000 bitcoins, at the time called 'mystery buyer'. The company's goal is to fund 100 bitcoin businesses within 2–3 years with $10,000 to $20,000 for a 6% stake. Investors also invest in bitcoin mining. According to a 2015 study by Paolo Tasca, Bitcoin startups raised almost $1 billion in three years (Q1 2012 – Q1 2015).

Political economy

Bitcoin's appeal reaches from left wing critics, "who perceive the state and banking sector as representing the same elite interests, […] recognising in it the potential for collective direct democratic governance of currency" and socialists proposing their "own states, complete with currencies", to right wing critics suspicious of big government, at a time when activities within the regulated banking system were responsible for the severity of the financial crisis of 2007–08, "because governments are not fully living up to the responsibility that comes with state-sponsored money". Bitcoin has been described as "removing the imbalance between the big boys of finance and the disenfranchised little man, potentially allowing early adopters to negotiate favourable rates on exchanges and transfers – something that only the very biggest firms have traditionally enjoyed". Two WSJ journalists describe bitcoin in their book as "about freeing people from the tyranny of centralised trust".