An Examination of Bitcoin's Structural Shortcomings as Money: A Synthesis of Economic and Technical Critiques

TL;DR

This paper critically evaluates Bitcoin's potential as money, combining economic theory and technical analysis to argue that it functions more as a speculative asset than a stable monetary standard.

Contribution

It synthesizes economic critiques from Post-Keynesian and Austrian perspectives with technical analysis to assess Bitcoin's suitability as money.

Findings

Bitcoin lacks the properties of a stable monetary asset.

It does not meet the criteria of the Regression Theorem.

Bitcoin's volatility and structural issues hinder its use as money.

Abstract

Since its inception, Bitcoin has been positioned as a revolutionary alternative to national currencies, attracting immense public and academic interest. This paper presents a critical evaluation of this claim, suggesting that Bitcoin faces significant structural barriers to qualifying as money. It synthesizes critiques from two distinct schools of economic thought - Post-Keynesianism and the Austrian School - and validates their conclusions with rigorous technical analysis. From a Post-Keynesian perspective, it is argued that Bitcoin does not function as money because it is not a debt-based IOU and fails to exhibit the essential properties required for a stable monetary asset (Vianna, 2021). Concurrently, from an Austrian viewpoint, it is shown to be inconsistent with a strict interpretation of Mises's Regression Theorem, as it lacks prior non-monetary value and has not achieved the status of the most saleable commodity (Peniaz and Kavaliou, 2024). These theoretical arguments are then supported by an empirical analysis of Bitcoin's extreme volatility, hard-coded scalability limits, fragile market structure, and insecure long-term economic design. The paper concludes that Bitcoin is more accurately characterized as a novel speculative asset whose primary legacy may be the technological innovation it has spurred, rather than its viability as a monetary standard.