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Hayekian Hurdles: Challenges to Cryptocurrency as a Viable Basis for a New Monetary Order

Author

Listed:
  • Luís Pedro Freitas

    (Faculty of Economics, University of Porto, Rua Dr. Roberto Frias s/n, 4200-464 Porto, Portugal)

  • Jorge Cerdeira

    (IS-UP, Faculty of Arts and Humanities, University of Porto, Via Panorâmica s/n, 4150-564 Porto, Portugal
    CEF.UP, Faculty of Economics, University of Porto, Rua Dr. Roberto Frias s/n, 4200-464 Porto, Portugal)

  • Diogo Lourenço

    (CEF.UP, Faculty of Economics, University of Porto, Rua Dr. Roberto Frias s/n, 4200-464 Porto, Portugal)

Abstract

The rise of cryptocurrencies over the past decade has promised to challenge the dominance of fiat money systems and reshape monetary policy. However, recent developments, including market volatility and the collapse of key exchanges like FTX, have eroded public trust, raising skepticism of a feasible transition to a crypto-based monetary system. This paper explores why cryptocurrencies have not met the expectations of their proponents, particularly those who saw them as a step towards Friedrich Hayek’s vision for competitive currency issuance. While cryptocurrencies reflect some aspects of Hayek’s model, their instability—especially in Bitcoin-like assets—undermines their role as a reliable alternative to fiat money. The paper also considers how central bank independence and regulatory gaps further hinder the development of a robust cryptocurrency framework. Despite the continued relevance of Hayek’s ideas in today’s monetary landscape, the entrenched structures of modern central banks and the rise of Central Bank Digital Currencies suggest that a decentralised currency order remains unlikely in the near future.

Suggested Citation

  • Luís Pedro Freitas & Jorge Cerdeira & Diogo Lourenço, 2025. "Hayekian Hurdles: Challenges to Cryptocurrency as a Viable Basis for a New Monetary Order," Economies, MDPI, vol. 13(1), pages 1-17, January.
    • Handle: RePEc:gam:jecomi:v:13:y:2025:i:1:p:12-:d:1562028
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    References listed on IDEAS

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    1. Luca Fantacci, 2019. "Cryptocurrencies and the Denationalization of Money," International Journal of Political Economy, Taylor & Francis Journals, vol. 48(2), pages 105-126, April.
    2. Aharon, David Y. & Demir, Ender, 2022. "NFTs and asset class spillovers: Lessons from the period around the COVID-19 pandemic," Finance Research Letters, Elsevier, vol. 47(PA).
    3. David Sanz Bas, 2020. "Hayek and the cryptocurrency revolution [Hayek y la revolución de las criptomonedas]," Iberian Journal of the History of Economic Thought, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales, Dpto. Historia e Instituciones Económicas I., vol. 7(1), pages 15-28.
    4. Michael Peneder, 2022. "Digitization and the evolution of money as a social technology of account," Journal of Evolutionary Economics, Springer, vol. 32(1), pages 175-203, January.
    5. Sergio Luis Náñez Alonso & Javier Jorge-Vázquez & Miguel Ángel Echarte Fernández & David Sanz-Bas, 2024. "Bitcoin’s bubbly behaviors: does it resemble other financial bubbles of the past?," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-15, December.
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