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Digital currency and privacy

Author

Listed:
  • Kang, Kee-Youn

    (School of Business, Yonsei University)

Abstract

We develop a monetary model in which a private company issues digital currency and uses payment data to estimate consumers' preferences. Sellers purchase preference information to produce goods that better match consumers' preferences. A monopoly arises in the digital currency industry, and digital currency is not issued if the inflation rate is sufficiently high. Due to reinforcing interactions between the value of preference information and trade volume, multiple equilibria (with and without digital currency) can exist depending on market structures for monetary exchanges. When left to market forces alone, socially efficient uses of payment data may not occur.

Suggested Citation

  • Kang, Kee-Youn, 2024. "Digital currency and privacy," Theoretical Economics, Econometric Society, vol. 19(1), January.
    • Handle: RePEc:the:publsh:5081
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Digital currency; privacy; transaction data; preference information; strategic complementarities;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)

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