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Virtual Money Illusion and the Fundamental Value of Non-Fiat Anonymous Digital Payment Methods

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  • Greg W. Hunter

    (California State Polytechnic University)

  • Craig Kerr

    (California State Polytechnic University)

Abstract

This paper discusses the determinants of a Non-Fiat Anonymous Digital Payment Method’s (N-FAD) value and illustrates a relationship between N-FAD transactions, economic growth, and inflation. The relationship raises a heretofore unmentioned issue concerning the ability of monetary authorities to operate effectively, which justifies regulatory concerns over bitcoin and other N-FADs. Our method of analysis allows for empirical estimates that characterize the magnitude of the concern, as it relates to the use of bitcoin. Finally, we are able to identify the stylized features of bitcoin that complicate monetary policy, comment on how they relate to the value of N-FADs more generally, and provide suggestions for future research.

Suggested Citation

  • Greg W. Hunter & Craig Kerr, 2019. "Virtual Money Illusion and the Fundamental Value of Non-Fiat Anonymous Digital Payment Methods," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 25(2), pages 151-164, May.
    • Handle: RePEc:kap:iaecre:v:25:y:2019:i:2:d:10.1007_s11294-019-09737-4
    DOI: 10.1007/s11294-019-09737-4
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    References listed on IDEAS

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    Cited by:

    1. Radosław Miśkiewicz & Krzysztof Matan & Jakub Karnowski, 2022. "The Role of Crypto Trading in the Economy, Renewable Energy Consumption and Ecological Degradation," Energies, MDPI, vol. 15(10), pages 1-15, May.

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