Cryptocurrencies: a revolutionary innovation or a scam?

Abstract

A cryptocurrency is a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. The underlying idea has been met with enthusiasm because it promises to replace trust in long-standing institutions, such as commercial and central banks, with trust in a new, fully decentralised system founded on the blockchain and related distributed ledger technology. Interest in cryptocurrencies can be traced back the 2013 financial crisis in Cyprus, which led to the confiscation of domestic bank accounts. It is suggested that cryptocurrenices, including bitcoin, cannot perform the functions of money (hence they are not currencies), they have no intrinsic value whatsoever, and that they cannot be used as inflation hedge.