Humboldt-Universität zu Berlin - High Dimensional Nonstationary Time Series

IRTG1792DP2021 011

Valuing cryptocurrencies: Three easy pieces

Michael C. Burda

This paper surveys the capacity of simple macroeconomic models — ”three easy
pieces” — to account for persistent and positive valuations of privately issued
assets based on the blockchain. Each of these three models — transactions demand
for a means of payment, consumption-based capital asset pricing, and search and
matching — highlights important aspects of digital payments. The mutual
interference of these jointly produced features may impede widespread use of
cryptocurrencies until technological innovations have been developed to separate

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