Year: 2025
Type: article
Abstract: ABSTRACT This paper develops a model of a cryptocurrency by incorporating mining into the otherwise standard search‐theoretic monetary framework. As usual, multiple equilibria exist. To obtain a sharp prediction on whether a cryptocurrency' s value will last in the future, I propose a notion of equilibrium refinement based on the feature that mining uses real resources. This refinement eliminates all equilibria where the value of the cryptocurrency is zero at some point in time or converges to zero over time. This result suggests that agents can collectively sustain the value of the cryptocurrency using costly mining as a coordinating device.
Source: International Economic Review
DOI: 10.1111/iere.70031
Author: Kohei Iwasaki
Institution: Kyoto University
Language: English
Topic: Economic theories and models
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: hybrid
Estimated APC paid: $3,570
OpenAlex ID: W4414416700