| Bitcoin is a highly controversial electronic currency. It is a fascinating convergence of computer technology, cryptography theory and economic liberalism. Its finite amount, decentration in issuance and trading, transparence in transaction record, which are all absent characteristics in credit currency, gets it many advocates. Critics see it as a ponzi scheme, or some deflationary currency doomed to extinction. Speculators trade it for its high volatility. Regulators maintain vigilance for its usage in illegal activities. However, no one can deny it as a major innovation in monetary history.After we analysed the technical principles and current status of bitcoin system, statistics and empirical analysis were carried out to study pricing mechanism of bitcoin and the bahavior of its owners. The greatest value of bitcoin, which is not yet realized, is to provide a payment service with lower cost. Bitcoin’s huge volatility and the impact of network effect, are playing negative roles in its way to becoming a real currency. However, by bringing in proper regulatory measures, strengthening the constructions of center nodes such as exchanges and payment services, it is entirely possible for bitcoin to have a bright future. |
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