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Corresponding Author:
Eduardo Garzón Espinosa, Department of Economy and Public Finance, Universidad Autónoma de Madrid

Coauthors:
Esteban Cruz Hidalgo, Department of Economics, Area of Applied Economics, University of Extremadura
Bibiana Medialdea Garcia, Department of Applied Economics, Structure and History, Universidad Complutense de Madrid
Carlos Sanchez Mato, Department of Applied Economics, Structure and History, Universidad Complutense de Madrid

Money or Crypto-Gold? Problematics and Possible Worlds for Cryptocurrencies

Volume 76 - Issue 3 - The Evolving Cryptoecosystem: Implications for the Financial Services Markets, August 2023
(pp. 429-452)
JEL classification: E42; O33; P10
Keywords: Money; Cryptocurrencies; Bitcoin; Blockchain; Monetary System

Abstract

The International Financial Crisis that erupted in 2008 has since fueled much discussion around the architecture of the monetary system. The emergence of and growing interest in so-called cryptocurrencies, which must be framed in that historical moment, has led some to argue those instruments will soon be regarded as an alternative to traditional currencies in domestic and international monetary system. There is already considerable literature seeking to explain what these ‘currencies’ consist of and the advantages that their use can conceivably bring. Less emphasized are the downsides and risks of such use, research on which is significantly less common. This article proposes to investigate whether cryptocurrencies can indeed serve as an alternative or substitute for State currencies – that is, whether they can be considered money – as well as whether they might be established as a digital reserve asset. Our main conclusions are that cryptocurrencies cannot be regarded as money and that significant drawbacks prevent their use as a reserve asset by central banks.

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Money or Crypto-Gold? Problematics and Possible Worlds for Cryptocurrencies

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Institute for International Economics of the Genoa Chamber of Commerce

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of the Genoa Chamber of Commerce