Flexible Majority Rules for Cryptocurrency Issuance

Hans Gersbach

No 19/322, CER-ETH Economics working paper series from CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich

Abstract: We suggest that flexible majority rules for currency issuance decisions foster the stability of a cryptocurrency. With flexible majority rules, the voteshare needed to approve a particular currency issuance growth is increasing with this growth rate. By choosing suitable parameters for these flexible majority rules, we show that optimal growth rates can be achieved in simple settings. Moreover, with flexible majority rules, changes in the composition of growth-friendly and growth-adverse agents only have a comparatively moderate impact on growth rates, and extreme growth rates are avoided. Finally, we show that optimal money growth rates are realized if agents entering financial contracts anticipate ensuing inflation rates determined by these flexible majority rules.

Keywords: Digital currency; central bank; voting; majority rule; flexible majority rules (search for similar items in EconPapers)
JEL-codes: D72 E31 E42 E52 E58 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2019-06
New Economics Papers: this item is included in nep-cdm, nep-mac, nep-mon and nep-pay
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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