In an endowment economy, we analyze coexistence and competition between traditional fiat money (Dollar) and cryptocurrency (Bitcoin). Agents can trade consumption goods in either currency or hold on to currency for speculative purposes. A central bank ensures a Dollar inflation target, while...

This paper reviews what cryptocurrencies are, and it frames them within the context of historical monetary experiences and contemporary monetary economics. The paper argues that, as pure duciary private money, cryptocurrencies are a bubble without a fundamental value and that they will not...

Bitcoin has portrayed itself as an alternative monetary system. For some it is meant to serve a parallel online p2p economy. For others it even poses a challenge to the established monetary system. We concentrate on the claim for Bitcoin as a possible replacement of established money and derive...

Can competition work among privately issued fiat currencies such as Bitcoin or Ethereum? Only sometimes. To show this, we build a model of competition among privately issued fiat currencies. We modify the current workhorse of monetary economics, the Lagos-Wright environment, by including...

Can competition among privately issued at currencies such as Bitcoin or Ethereum work? Only sometimes. To show this, we build a model of competition among privately issued at currencies. We modify the current workhorse of monetary economics, the Lagos-Wright environment, by including...

Cryptocurrency is private money and is costly to produce. In this paper, I ask whether cryptocurrency can serve as a medium of exchange, and whether it can coexist with fiat money as a widely accepted medium of exchange. To answer these questions, I develop two search-theoretic models: a model...

We develop a random-matching model to study the price dynamics of monies produced privately according to a time-consuming mining technology. We provide examples of mining technologies for which there exists a unique equilibrium where the value of money increases over time and reaches a steady...

We address the determination of bitcoin prices and decentralized security. Users forecast the transactional and resale value of holdings, pricing the risk of malicious systemic attacks. Miners contribute resources to protect against attackers, competing for block rewards. Bitcoin's design leads...

We develop a random-matching model to study the price dynamics of divisible monies produced privately by using a time-consuming mining technology. There exists a unique equilibrium where the value of money increases until it reaches a steady state. There is also a continuum of perfect-foresight...

The properties of money commonly referenced in the economics literature were originally identified by Jevons (1876) and Menger (1892) in the late 1800s and were intended to describe physical currencies, such as commodity money, metallic coins, and paper bills. In the digital era, many...