With all this buzz coming around Bitcoin( http://www.bitcoin.org/bitcoin.pdf ) I was just wondering how this is or isn't feassible in both a macroeconomics and microeconomics perspective taking both Keynes and Hayek models in consideration.

Question

anonymous · Answer

Like any form of currency, Bitcoins are an acceptable form of payment based purely on the fact that people will accept it as a form of payment. In theory, it could be used on a larger scale, but for the time being Bitcoins are mainly used as a way for people to purchase illegal items without the being traced. 

In order for Bitcoins to be mainstreamed, individuals would have to have a unique code on their computers that analyzes the data transferred to other unique codes. This could potentially be put in an app on say an IPhone or Android mobile device. 

In regards to Keynes Model, if Bitcoins were to blow up in New York, and the people in Los Angles thought they were stupid, then the total aggregate demand for them would be below its potential.

Hope that helps.