Social and Technical Opportunities and Risks of Cryptocurrencies and Blockchains

Abstract

This paper presents an overview of cryptocurrencies and blockchains for policy makers. It begins with an overview of market and industry basics, highlighting general interest in use and potential use cases. The paper then presents nine risks associated with use and development of cryptocurrencies and blockchains. While most of the risks are general to financial technologies, but pronounced and persistent with cryptocurrencies and blockchains, some of the risks are unique to cryptocurrencies and blockchains. The paper then describes three potential opportunities, concluding that, at least today, the risks outweigh the benefits for the continued use and development of cryptocurrencies and blockchains.