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Trends in cryptocurrencies and blockchain technologies: a monetary theory and regulation perspective

Author

Listed:
  • Peters, Gareth W.

    (University of Oxford - Man Institute of Quantitative Finance)

  • Panayi, Efstathios

    (London School of Economics)

  • Chapelley, Ariane

    (UCL, Department of Computer Science, London)

Abstract

The internet era has generated a requirement for low-cost, anonymous and rapidly verifiable transactions to be used for online barter, and fast settling money has emerged as a consequence. For the most part, electronic money (e-money) has fulfilled this role, but the last few years have seen two new types of money emerge — centralized virtual currencies, usually for the purpose of transacting in social and gaming economies, and cryptocurrencies, which aim to eliminate the need for financial intermediaries by offering direct peer-to-peer (P2P) online payments. We describe the historical context that led to the development of these currencies and some modern and recent trends in their uptake, in terms of both usage in the real economy and as investment products. As these currencies are purely digital constructs, with no government or local authority backing, we discuss them in the context of monetary theory, in order to determine how they may be valued under each. Finally, we provide an overview of the state of regulatory readiness in terms of dealing with transactions in these currencies in various regions of the world.

Suggested Citation

  • Peters, Gareth W. & Panayi, Efstathios & Chapelley, Ariane, 2015. "Trends in cryptocurrencies and blockchain technologies: a monetary theory and regulation perspective," Journal of Financial Perspectives, EY Global FS Institute, vol. 3(3), pages 92-113.
    • Handle: RePEc:ris:jofipe:0089
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    More about this item

    Keywords

    Monetary theory; cryptocurrencies; blockchain technologies; regulations;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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