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Cryptocurrencies and the Future of Money

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  • Matheus R. Grasselli
  • Alexander Lipton

Abstract

We review different classes of cryptocurrencies with emphasis on their economic properties. Pure-asset coins such as Bitcoin, Ethereum and Ripple are characterized by not being a liability of any economic agent and most resemble commodities such as gold. Central bank digital currencies, at the other end of the economic spectrum, are liabilities of a Central Bank and most resemble cash. In between, there exist a range of so-called stable coins, with varying degrees of economic complexity. We use balance sheet operations to highlight the properties of each class of cryptocurrency and their potential uses. In addition, we propose the basic structure for a macroeconomic model incorporating all the different types of cryptocurrencies under consideration.

Suggested Citation

  • Matheus R. Grasselli & Alexander Lipton, 2021. "Cryptocurrencies and the Future of Money," Papers 2109.10177, arXiv.org.
    • Handle: RePEc:arx:papers:2109.10177
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    References listed on IDEAS

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    1. Matheus R. Grasselli & Alexander Lipton, 2019. "On the normality of negative interest rates," Review of Keynesian Economics, Edward Elgar Publishing, vol. 7(2), pages 201-219, April.
    2. Matheus R. Grasselli & Alexander Lipton, 2019. "The Broad Consequences Of Narrow Banking," International Journal of Theoretical and Applied Finance (IJTAF), World Scientific Publishing Co. Pte. Ltd., vol. 22(01), pages 1-22, February.
    3. Claudio H. Dos Santos, 2005. "A stock-flow consistent general framework for formal Minskyan analyses of closed economies," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 27(4), pages 712-735.
    4. Codruta Boar & Andreas Wehrli, 2021. "Ready, steady, go? - Results of the third BIS survey on central bank digital currency," BIS Papers, Bank for International Settlements, number 114.
    5. Michael D. Bordo & Andrew T. Levin, 2017. "Central Bank Digital Currency and the Future of Monetary Policy," NBER Working Papers 23711, National Bureau of Economic Research, Inc.
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