Economics Seminar - "Bitcoin Prices Reveal Capital Controls and Exchange Rate Manipulations"

Bitcoin's decentralized ledger allows it to be used as an intermediary between currencies. This paper examines whether an exchange rate constructed using Bitcoin as an intermediary reflects unofficial market exchange rates. Finding suggestive evidence that this is true, the paper also shows that the Bitcoin-facilitated exchange rate can function as a highly refined measure of restrictions on international capital flows or exchange rate manipulation. As Bitcoin-based exchange rates exist at a daily frequency, they reveal transitory interventions that would otherwise go undetected. This result also serves as verification that Bitcoin is used to circumvent capital controls and managed exchange rates.