Report10.3386/W26816
A Model of Cryptocurrencies
TL;DR: In this paper, the authors model a cryptocurrency as membership in a decentralized digital platform developed to facilitate transactions between users of certain goods or services, and show that the rigidity induced by the cryptocurrency price having to clear membership demand with supply of token by speculators, especially with strong complementarity in membership demand, can lead to market breakdown.
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Abstract: We model a cryptocurrency as membership in a decentralized digital platform developed to facilitate transactions between users of certain goods or services. The rigidity induced by the cryptocurrency price having to clear membership demand with supply of token by speculators, especially with strong complementarity in membership demand, can lead to market breakdown. While user optimism mitigates the market fragility by increasing user participation, speculator sentiment exacerbates it by crowding users out. Informational frictions attenuate the risk of breakdown by dampening price volatility and platform performance. Furthermore, the users' anticipation of losses from strategic attacks by miners exacerbates the market fragility.
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Citations
Initial Coin Offerings: What Rights Do Investors Have (If Any)?
TL;DR: In this paper, the authors reviewed the growing literature on initial coin offerings (ICOs), summaries the articles included this special issue and also provided original evidence of the investor protection on ICOs from 37 countries.
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A New Economic Framework: A DSGE Model with Cryptocurrency
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Sentiment matters: the effect of news-media on spillovers among cryptocurrency returns
Erdinc Akyildirim,Ahmet Faruk Aysan,Oguzhan Cepni,Özge Serbest +3 more
TL;DR: This study examines the impact of news media sentiment on spillover effects in the cryptocurrency market, finding that positive sentiment significantly influences spillovers, particularly in community-based coins, and that social media sentiment has a stronger influence than traditional news sources.
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Flight to Bitcoin
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TL;DR: In this article, a novel phenomenon of flight-to-bitcoin (FTB) is uncovered, whereby local demand for Bitcoin increases with local economic policy uncertainties, and the authors find that FTB is mainly driven by a lack of confidence in local authorities.
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