Bitcoin is Cool: St. Louis Federal Reserve

The Federal Reserve Bank of St. Louis has published another research paper validating bitcoin’s legitimacy as a currency, even when used as a tool to facilitate private transactions.

The report, which was written by economist Charles Kahn and published by the St. Louis Fed last month, examines the role of private payments in monetary systems.

Bitcoin a Legitimate Privacy Tool

Kahn argues that, beyond their attractiveness for illegal transactions, private payments serve important, legitimate functions in any monetary system, namely, “protection from malfeasance or negligence by counterparties or by the payments system provider itself.”

Traditionally, this payments niche was filled by cash, but cash is quickly being replaced by digital payments This, Kahn explains, does not mean that demand for private transactions will disappear; rather, he says that “the replacement of cash by central bank electronic money is likely to spur demand for alternative means of payments to…