Cryptocurrencies in an economic context

Abstract

Cryptocurrencies are online protocols that serve as virtual currencies. The most famous cryptocurrency is bitcoin, which is based on a white paper published under the pseudonym “Satoshi Nakamoto” and which was launched in 2009. The cryptocurrency model has shifted financial transactions away from the use of central authorities to the described system using cryptographic protocols. Cryptocurrencies set the stage for participation of millions of international and anonymous participants, thereby resulting in a profound economic impact. Ten attributes characterize cryptocurrencies in today’s global economic environment: infancy, evolvement, volatility, inclusion, anonymity, legitimacy, energy, location, technology and no oversight. In the economic realm, these attributes suggest that countries differ in their ability to develop cryptocurrencies within the country or even to actively participate in cryptocurrency trading. Given the reliance on certain skills, technological infrastructure and government policies, there exist a variation worldwide in cryptocurrency usage across countries. The chapter also presents an overview on the key concepts discussed in this book.