Cryptocurrencies: Policy, Economics and Fairness

Abstract

Cryptocurrencies promise to replace fiat money with private money underpinned by algorithms, not government guarantees. While the technology is elegant, the success and failure of cryptocurrencies in the competition with fiat will not be determined by technology alone. It is more important to avoid serious economic and social consequences, and a cryptocurrency based monetary system would suffer from persistent price volatility and high systemic risk and would exasperate inequality.

Keywords: cryptocurrencies, systemic risk, money

JEL Classification: G00, G01, E42