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A Short Introduction to the World of Cryptocurrencies


  • Aleksander Berentsen
  • Fabian Schär


In this article, we give a short introduction to cryptocurrencies and blockchain technology. The focus of the introduction is on Bitcoin, but many elements are shared by other blockchain implementations and alternative cryptoassets. The article covers the original idea and motivation, the mode of operation and possible applications of cryptocurrencies, and blockchain technology. We conclude that Bitcoin has a wide range of interesting applications and that cryptoassets are well suited to become an important asset class.

Suggested Citation

  • Aleksander Berentsen & Fabian Schär, 2018. "A Short Introduction to the World of Cryptocurrencies," Review, Federal Reserve Bank of St. Louis, vol. 100(1), pages 1-16.
  • Handle: RePEc:fip:fedlrv:00092
    DOI: 10.20955/r.2018.1-16

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    References listed on IDEAS

    1. Nosal, Ed & Rocheteau, Guillaume, 2011. "Money, Payments, and Liquidity," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262016281.
    2. Berentsen, Aleksander, 1998. "Monetary Policy Implications of Digital Money," Kyklos, Wiley Blackwell, vol. 51(1), pages 89-117.
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    Cited by:

    1. Donato Masciandaro, 2018. "Central Bank Digital Cash and Cryptocurrencies: Insights from a New Baumol–Friedman Demand for Money," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 51(4), pages 540-550, December.
    2. Peter Fratrič & Giovanni Sileno & Sander Klous & Tom Engers, 2022. "Manipulation of the Bitcoin market: an agent-based study," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 8(1), pages 1-29, December.
    3. Jamsheed Shorish, 2019. "Hedonic pricing of cryptocurrency tokens," Digital Finance, Springer, vol. 1(1), pages 163-189, November.
    4. Galina Hale & Arvind Krishnamurthy & Marianna Kudlyak & Patrick Shultz, 2018. "How Futures Trading Changed Bitcoin Prices," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.
    5. Anastasia Melachrinos & Christian Pfister, 2020. "Stablecoins: A Brave New World?," Working papers 757, Banque de France.
    6. Borgonovo, Emanuele & Caselli, Stefano & Cillo, Alessandra & Masciandaro, Donato & Rabitti, Giovanni, 2021. "Money, privacy, anonymity: What do experiments tell us?," Journal of Financial Stability, Elsevier, vol. 56(C).
    7. Schär, Fabian, 2020. "Blockchain Forks: A Formal Classification Framework and Persistency Analysis," MPRA Paper 101712, University Library of Munich, Germany.
    8. Rietz, Justin, 2019. "Secondary currency acceptance: Experimental evidence with a dual currency search model," Journal of Economic Behavior & Organization, Elsevier, vol. 166(C), pages 403-431.
    9. David Andolfatto, 2018. "Blockchain: What It Is, What It Does, and Why You Probably Don’t Need One," Review, Federal Reserve Bank of St. Louis, vol. 100(2).
    10. Schär, Fabian & Schuler, Katrin & Wagner, Tobias, 2020. "Blockchain Vending Machine: A Smart Contract-Based Peer-to-Peer Marketplace for Physical Goods," MPRA Paper 101733, University Library of Munich, Germany.
    11. Antonakakis, Nikolaos & Chatziantoniou, Ioannis & Gabauer, David, 2019. "Cryptocurrency market contagion: Market uncertainty, market complexity, and dynamic portfolios," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 61(C), pages 37-51.
    12. Aleksander Berentsen & Fabian Schär, 2018. "The Case for Central Bank Electronic Money and the Non-case for Central Bank Cryptocurrencies," Review, Federal Reserve Bank of St. Louis, vol. 100(2), pages 97-106.
    13. Angelo Corelli, 2018. "Cryptocurrencies and Exchange Rates: A Relationship and Causality Analysis," Risks, MDPI, vol. 6(4), pages 1-11, October.
    14. Gurdgiev, Constantin & O’Loughlin, Daniel, 2020. "Herding and anchoring in cryptocurrency markets: Investor reaction to fear and uncertainty," Journal of Behavioral and Experimental Finance, Elsevier, vol. 25(C).
    15. Almosova, Anna, 2018. "A Monetary Model of Blockchain," IRTG 1792 Discussion Papers 2018-008, Humboldt University of Berlin, International Research Training Group 1792 "High Dimensional Nonstationary Time Series".
    16. Shorish, Jamsheed, 2018. "Blockchain State Machine Representation," SocArXiv eusxg, Center for Open Science.
    17. Stephen D. Williamson, 2018. "Is Bitcoin a Waste of Resources?," Review, Federal Reserve Bank of St. Louis, vol. 100(2), pages 107-115.
    18. Alexander Karaivanov, 2021. "Blockchains, Collateral and Financial Contracts," Discussion Papers dp21-03, Department of Economics, Simon Fraser University.
    19. Ćosić Karlo & Časni Anita Čeh, 2019. "The impact of cryptocurrency on the efficient frontier of emerging markets," Croatian Review of Economic, Business and Social Statistics, Sciendo, vol. 5(2), pages 64-75, December.
    20. Almosova, Anna, 2018. "A Monetary Model of Blockchain," VfS Annual Conference 2018 (Freiburg, Breisgau): Digital Economy 181502, Verein für Socialpolitik / German Economic Association.
    21. Lee Alan Smales, 2020. "One Cryptocurrency to Explain Them All? Understanding the Importance of Bitcoin in Cryptocurrency Returns," Economic Papers, The Economic Society of Australia, vol. 39(2), pages 118-132, June.
    22. Klarin, Anton, 2020. "The decade-long cryptocurrencies and the blockchain rollercoaster: Mapping the intellectual structure and charting future directions," Research in International Business and Finance, Elsevier, vol. 51(C).

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    More about this item


    Digital currency; Bitcoin; Cryptocurrency; Blockchain;
    All these keywords.

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • E59 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Other


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