Markus K Brunnermeier, Joseph Abadi, 17 July 2018

Cryptocurrencies and the underlying distributed ledger technology have exploded into public consciousness over the last few years, with devotees insisting that the technology will revolutionise financial transactions and ownership data. This column identifies a ‘blockchain trilemma’ whereby no ledger can fully satisfy the three desirable properties of decentralisation, correctness, and cost-efficiency. It further explains how distributed ledgers enhance competition but introduce costs above and beyond the well-known electricity costs.

Michael Casey, Jonah Crane, Gary Gensler, Simon Johnson, Neha Narula, 16 July 2018

The idea of a new software system that powers a consensus-driven form of shared record keeping has already had a profound effect, encouraging rapid and substantial investment in what is now commonly referred to as blockchain technology. This column introduces the latest Geneva Report on the World Economy, which assesses the available evidence and likely impact for this technology across a wide range of applications and explores the potential use cases for the financial sector, and the ways in which the organisation of these activities may change over time.

Simon Johnson, 16 July 2018

Blockchain technology has the potential to be a catalyst for change to incumbent financial sector firms. In this Vox Talk, Tim Phillips talks to Simon Johnson, one of the authors of the latest Geneva Report on the World Economy which looks at the technology and its possible applications. 

Lin William Cong, Zhiguo He, 05 July 2018

Blockchain technology provides decentralised consensus, which potentially enlarges the contracting space using tamper-proof smart contracts. But this implies distributed information. The column argues that there is a tension between these two features of blockchain. While complete contracts may increase competition, distributed information may also make collusion between incumbents more effective. 

Antonio Fatás, Beatrice Weder di Mauro, 07 May 2018

Economists have been dismissive of cryptocurrencies, but fintech entrepreneurs and enthusiasts continue to see their disruptive potential. This column considers the theoretical and practical arguments on both sides of the debate. Traditional currencies are overwhelmingly superior as forms of money, and cryptocurrencies’ advantage in terms of lax regulation is unlikely to last. There remains, however, ample potential for innovation in payment systems.

Gur Huberman, Jacob Leshno, Ciamac C. Moallemi, 16 December 2017

Cryptocurrencies have caught the attention of industry, academia, and the public at large. This column analyses an economic model of a cryptocurrency system featuring user-generated transaction fees, focusing on Bitcoin as the leading example. The Bitcoin system requires significant congestion to raise revenue and fund infrastructure or risk collapse in the long term. Moreover, the current design of the system – specifically the processing of large but infrequent blocks of transactions – makes it less efficient at raising revenue.

Dirk Niepelt, 19 October 2016

The blockchain technology underlying Bitcoin and other cryptocurrencies is attracting growing interest. This column argues that if transactions facilitated by this technology become pervasive, it will have implications for the conduct (and success) of central bank monetary policy. Central banks should embrace the technologies that underpin cryptocurrencies, or risk being cut out from intermediation and surveillance and also risk payment service providers moving to other currency areas with an institutional environment that is more appealing for buyers and sellers.

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