IDEAS home Printed from https://ideas.repec.org/p/chf/rpseri/rp2353.html
   My bibliography  Save this paper

Tokenization: A Potential Pathway for Bitcoin’s Future

Author

Listed:
  • Georgii Zvonka

    (University of Lausanne; Swiss Finance Institute)

Abstract

Tokenization is a process that may cause a transition to new monetary standards in a world of decentralized money. The possibility of tokenization explains why Bitcoin may have a high value today under expectations that the gradual decline in the mining reward will reduce security, as explained by Auer (2019). The paper introduces tokenization as a way to upgrade Bitcoin and discusses how the possibility of tokenization can affect the value of the first cryptocurrency. Tokenization may be deferred because of the balance between the network effect and congestion in the usage of Bitcoin’s blockchain against those for the new monetary standard. As security of Bitcoin declines, this balance shifts in favour of the new monetary standard. The new monetarist model predicts zero price of Bitcoin in the view of declining security and absence of the option for tokenization. Enabling agents to use tokenized version of Bitcoin instead of Bitcoin itself allows for an equilibrium in which the price of Bitcoin increases with time as the new monetary standard is adopted more widely.

Suggested Citation

  • Georgii Zvonka, 2023. "Tokenization: A Potential Pathway for Bitcoin’s Future," Swiss Finance Institute Research Paper Series 23-53, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp2353
    as

    Download full text from publisher

    File URL: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4461414
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    Bitcoin; tokenization; monetary standards; monetary economics; diffusion processes;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:chf:rpseri:rp2353. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ridima Mittal (email available below). General contact details of provider: https://edirc.repec.org/data/fameech.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.