Humboldt-Universität zu Berlin - High Dimensional Nonstationary Time Series

IRTG1792DP2018 044

Understanding Cryptocurrencies

Wolfgang Karl Härdle
Campbell R. Harvey
Raphael C. G. Reule

Cryptocurrencies refer to a type of digital cash that use distributed ledger - or
blockchain technology - to provide secure transactions. These currencies are generally
misunderstood. While initially dismissed as fads or bubbles, many large central
banks are considering launching their own version of national cryptocurrencies. In
contrast to most data in nancial economics, there is a plethora of detailed (free)
data on the history of every transaction for the cryptocurrency complex. Further,
there is little empirically-oriented research on this new asset class. This is an extraordinary
research opportunity for academia. We provide a starting point by
giving an insight into cryptocurrency mechanisms and detailing summary statistics
and focusing on potential future research avenues in nancial economics.

Cryptocurrency, Blockchain, Bitcoin, Economic bubbles, Peer-to-Peer, Cryptographic
hashing, Consensus, Proof-of-Work, Proof-of-stake, Volatility

JEL Classification:
C01, C58, E42, E51, G10, K24, K42, L86, O31