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Cryptocurrencies: policy, economics and fairness

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  • Danielsson, Jon

Abstract

Cryptocurrencies promise to replace fiat money with private money whose integrity is underpinned by algorithms, not government guarantees. While the technology is elegant, the success and failure of cryptocurrencies in the competition with fiat will not be determined by technology alone. What is more important is that any serious economic and social consequences be avoided. A cryptocurrency based monetary system would suffer from persistent deflation and higher systemic risk than existing fiat systems, and would exasperate inequality. If, however, cryptocurrencies cannot replace existing fiat money, their terminal value is zero.

Suggested Citation

  • Danielsson, Jon, 2018. "Cryptocurrencies: policy, economics and fairness," LSE Research Online Documents on Economics 118913, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:118913
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    File URL: http://eprints.lse.ac.uk/118913/
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    More about this item

    JEL classification:

    • G00 - Financial Economics - - General - - - General
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System

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