Legitimizing Bitcoin as a Currency and Store of Value: Using Discrete Monetary Units to Consolidate Value and Drive Market Growth

  • Chad Albrecht Utah State University
  • Steven Hawkins Southern Utah University
  • Kristopher McKay Duffin Utah State University
Keywords: Cryptocurrency, Fractional Discrete Units, Bitcoin, Whole Number Bias, Distance Effect, Monetary Units, Satoshis, Bits

Abstract

Cryptocurrency, and especially Bitcoin, has struggled to gain recognition as a legitimate currency from governments, financial institutions, and consumers. This has occurred because many analysts and consumers believe that Bitcoin is not a stable and consistent store of value, a unit of measurement, or a medium of exchange. One way to overcome this challenge is for Bitcoin to be used as both a currency and store of value by a greater percentage of the world’s population. This paper seeks to identify how a change in Bitcoin’s monetary measurement (or denomination) can more easily facilitate Bitcoin transactions to increase its use. Specifically, we posit that applying whole number bias theory, from the cognitive psychology and mathematics fields, to Bitcoin’s unit of measurement will allow the value of Bitcoin to be referenced in smaller and easier to
understand units with fewer numbers after the decimal point—such as the “Bit” or the “Satoshi.” In the process, the use of Bitcoin will include more whole numbers and allow the general public to more easily assign value to Bitcoin in day-to-day transactions.

 

Author Biographies

Chad Albrecht, Utah State University

Chad Albrecht is an Associate Professor of Strategy & the Director of MBA Programs at Utah State University.  

Steven Hawkins, Southern Utah University

Steven Hawkins is an Assistant Professor of Accounting at the Dixie L. Leavitt School of Business at Southern Utah University

Kristopher McKay Duffin, Utah State University
Kristopher McKay Duffin is a Research Associate with the Huntsman School of Business at Utah State University

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Published
2020-04-06
How to Cite
Albrecht, C., Hawkins, S., & Duffin, K. M. (2020). Legitimizing Bitcoin as a Currency and Store of Value: Using Discrete Monetary Units to Consolidate Value and Drive Market Growth. Ledger, 5. https://doi.org/10.5195/ledger.2020.167
Section
Research Articles