Humboldt-Universität zu Berlin - High Dimensional Nonstationary Time Series

Valuing cryptocurrencies: Three easy pieces

Michael C. Burda

Abstract:
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
them.

JEL Classification:
C00