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Valuation of Cryptocurrency Without Intrinsic Value: A Promise of Future Payment System and Implications to De-dollarization

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  • Garrison Hongyu Song

    (SUNY)

Abstract

A random search-based model is proposed to study the valuation of cryptocurrency. We provide a unique approach to valuing cryptocurrency according to people’s acceptance probability of cryptocurrency. Although cryptocurrency is generally considered without intrinsic value, it can have value in an exchange economy. Cryptocurrency has shown huge potential as a future payment system to replace the US dollar’s position in international trade, our model, however, indicates that the value of cryptocurrency is fundamentally unstable, and thus, it has a long way to go before fulfilling its mission.

Suggested Citation

  • Garrison Hongyu Song, 2023. "Valuation of Cryptocurrency Without Intrinsic Value: A Promise of Future Payment System and Implications to De-dollarization," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 49(2), pages 221-248, April.
    • Handle: RePEc:pal:easeco:v:49:y:2023:i:2:d:10.1057_s41302-023-00237-2
    DOI: 10.1057/s41302-023-00237-2
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    References listed on IDEAS

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    More about this item

    Keywords

    Cryptocurrency; Bitcoin; Valuation; De-dollarization; Search theory;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • F30 - International Economics - - International Finance - - - General

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