Cryptocurrencies is a part of the fast growing fintech market. Bitcoin is the first
cryptocurrency, but also the currency with the largest market share. Bitcoin was created in
2009, by Satoshi Nakamoto, and have in the years since its release faced very volatile
exchange rates. The purpose of Bitcoin is to create a currency that allows payments to be sent
from one party to another without going through a financial institution. The volatile exchange
rate, and Bitcoins attributes has raised the question of how to define Bitcoin. This thesis
answers the research question: Bitcoin – a Currency or an Asset?
The thesis defines what is fiat currency, monetary theory and monetary value, in addition to
the asset classes capital assets, consumable/transferable asset and store of value assets.
Bitcoin’s attributes are discussed in light of these definitions. Also included in the background
are the governmental views on Bitcoin. Here the thesis focuses on how cryptocurrency is
handled by legislators. In Japan cryptocurrencies are deemed legal tender, in the E.U. it is
defined as currency, in the U.S. Bitcoin is defined as a commodity, while other
cryptocurrencies is defined as securities, in China government has issued a ban on all
cryptocurrency. The empirical part of this thesis is made up by time series regressions and
rolling window regression using Bitcoin exchange rates, price of gold, OFRS financial stress
index, S&P 500 and the federal funds rate as parameters.
Bitcoin is designed to function as a currency, but lack of acceptance in the economy causes
problems for the users. The volatile exchange rate also causes problems as it makes Bitcoin
worthless as a measurement of value, and also difficult to use Bitcoin for consumption.
Findings from the time series regressions and the rolling window regressions indicate that the
Bitcoin’s exchange rate follows the asset market. When the S&P 500 increases and the OFR
financial stress index is negative, indicating low stress in the financial market, the Bitcoin
exchange rate increases. The exchange rate is also positively correlated with the price of gold.
The empirical evidence, together with the theoretical framework leads to the conclusion that
Bitcoin is an asset.nhhma
