Can Cryptocurrencies Become a Commonly Accepted Means of Exchange?
25 Pages Posted: 3 Sep 2020
Date Written: July 25, 2020
This chapter studies the challenges a cryptocurrency faces to become a common means of exchange. In particular, the paper discusses the scalability constraint that limits the number of transactions a cryptocurrency may be able to verity per unit of time, the network effect in goods that function as money that increases the cost of new currencies to gain market share, and the implications of the fixed monetary rule present in most cryptocurrencies that departs from an elastic optimal monetary policy. Potential solutions for each case are also discussed.
Keywords: cryptocurrencies, money, common means of exchange
JEL Classification: E42, E59
Suggested Citation: Suggested Citation