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The economics of digital currencies

Author

Listed:
  • Ali, Robleh

    () (Bank of England)

  • Barrdear, John

    () (Bank of England)

  • Clews, Roger

    () (Bank of England)

  • Southgate, James

    () (Bank of England)

Abstract

Although digital currencies could, in theory, serve as money for anybody with an internet-enabled device, at present they act as money only to a limited extent and only for relatively few people. The economics of the schemes as currently designed, both in terms of individuals’ incentives and at a macroeconomic level, pose significant challenges to their widespread adoption. Digital currencies do not currently pose a material risk to monetary or financial stability in the United Kingdom. The Bank continues to monitor developments in this area.

Suggested Citation

  • Ali, Robleh & Barrdear, John & Clews, Roger & Southgate, James, 2014. "The economics of digital currencies," Bank of England Quarterly Bulletin, Bank of England, vol. 54(3), pages 276-286.
  • Handle: RePEc:boe:qbullt:0148
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    File URL: https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/the-economics-of-digital-currencies.pdf?la=en&hash=E9E56A61A6D71A97DC8535FEF211CC08C0F59B30
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    References listed on IDEAS

    as
    1. McLeay, Michael & Radia, Amar & Thomas, Ryland, 2014. "Money creation in the modern economy," Bank of England Quarterly Bulletin, Bank of England, vol. 54(1), pages 14-27.
    2. David Yermack, 2013. "Is Bitcoin a Real Currency? An economic appraisal," NBER Working Papers 19747, National Bureau of Economic Research, Inc.
    3. Murphy, Emma & Senior, Stephen, 2013. "Changes to the Bank of England," Bank of England Quarterly Bulletin, Bank of England, vol. 53(1), pages 20-28.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Wilko Bolt & Maarten van Oordt, 2016. "On the Value of Virtual Currencies," Staff Working Papers 16-42, Bank of Canada.
    2. Baumohl, Eduard, 2018. "Are cryptocurrencies connected to forex? A quantile cross-spectral approach," EconStor Preprints 174884, ZBW - German National Library of Economics.
    3. Jonathan Donier & Jean-Philippe Bouchaud, 2015. "Why Do Markets Crash? Bitcoin Data Offers Unprecedented Insights," Post-Print hal-01277584, HAL.
    4. Laura Alessandretti & Abeer ElBahrawy & Luca Maria Aiello & Andrea Baronchelli, 2018. "Machine Learning the Cryptocurrency Market," Papers 1805.08550, arXiv.org.
    5. Ross D. King, 2016. "On the Use of Computer Programs as Money," Papers 1608.00878, arXiv.org.
    6. Beat Weber, 2014. "Bitcoin – The Promise and Limits of Private Innovation in Monetary and Payment Systems," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 4, pages 53-66.
    7. Bariviera, Aurelio F. & Basgall, María José & Hasperué, Waldo & Naiouf, Marcelo, 2017. "Some stylized facts of the Bitcoin market," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 484(C), pages 82-90.
    8. Pieters, Gina & Vivanco, Sofia, 2017. "Financial regulations and price inconsistencies across Bitcoin markets," Information Economics and Policy, Elsevier, vol. 39(C), pages 1-14.
    9. Mariusz Tarnopolski, 2017. "Modeling the price of Bitcoin with geometric fractional Brownian motion: a Monte Carlo approach," Papers 1707.03746, arXiv.org, revised Aug 2017.
    10. Dermine, J., 2016. "Digital banking and market disruption: a sense of déjà vu?," Financial Stability Review, Banque de France, issue 20, pages 17-24, April.
    11. Fantazzini, Dean & Nigmatullin, Erik & Sukhanovskaya, Vera & Ivliev, Sergey, 2016. "Everything you always wanted to know about bitcoin modelling but were afraid to ask. I," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 44, pages 5-24.
    12. Ke Wu & Spencer Wheatley & Didier Sornette, 2018. "Classification of cryptocurrency coins and tokens by the dynamics of their market capitalisations," Papers 1803.03088, arXiv.org, revised May 2018.
    13. Fry, John & Cheah, Eng-Tuck, 2016. "Negative bubbles and shocks in cryptocurrency markets," International Review of Financial Analysis, Elsevier, vol. 47(C), pages 343-352.
    14. Zura Kakushadze & Jim Kyung-Soo Liew, 2018. "CryptoRuble: From Russia with Love," Papers 1801.05760, arXiv.org.
    15. Aleksei Churilov, 2016. "The nature of Bitcoin and some practical aspects of its use by business," Proceedings of International Academic Conferences 3605453, International Institute of Social and Economic Sciences.
    16. Aaron Kumar & Christie Smith, 2017. "Crypto-currencies – An introduction to not-so-funny moneys," Reserve Bank of New Zealand Analytical Notes series AN2017/07, Reserve Bank of New Zealand.
    17. repec:nbb:ecrart:y:2017:m:june:i:i:p:79-92 is not listed on IDEAS
    18. Abeer ElBahrawy & Laura Alessandretti & Anne Kandler & Romualdo Pastor-Satorras & Andrea Baronchelli, 2017. "Evolutionary dynamics of the cryptocurrency market," Papers 1705.05334, arXiv.org, revised Nov 2017.
    19. Olga Gouveia & Enestor Dos Santos & Santiago Fernandez de Lis & Alejandro Neut & Javier Sebastian, 2017. "Central Bank Digital Currencies: assessing implementation possibilities and impacts," Working Papers 17/04, BBVA Bank, Economic Research Department.
    20. Gabriele Camera, 2016. "A Perspective on Electronic Alternatives to Traditional Currencies," Working Papers 16-32, Chapman University, Economic Science Institute.
    21. Lawrence H. White, 2015. "The Market for Cryptocurrencies," Cato Journal, Cato Journal, Cato Institute, vol. 35(2), pages 383-402, Spring/Su.
    22. repec:eee:ijrema:v:34:y:2017:i:1:p:3-21 is not listed on IDEAS
    23. Fish, Tom & Whymark , Roy, 2015. "How has cash usage evolved in recent decades? What might drive demand in the future?," Bank of England Quarterly Bulletin, Bank of England, vol. 55(3), pages 216-227.
    24. Brandvold, Morten & Molnár, Peter & Vagstad, Kristian & Andreas Valstad, Ole Christian, 2015. "Price discovery on Bitcoin exchanges," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 36(C), pages 18-35.

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