 Hedonic Pricing of Cryptocurrency TokensNo wdg2v, SocArXiv from Center for Open Science Abstract: A cryptocurrency token offers a method of incentivizing behavior in a way that supports trusted interaction (through its blockchain-based infrastructure). It also acts as a multipurpose instrument that may fulfill a variety of roles, such as facilitating digital use cases or acting as a store of value. Understanding how to value such an instrument is complicated by these multiple roles because the relative valuation of one role cannot be disentangled from another role—a token is a ‘bundled’ good. In this work a general pricing model for cryptocurrency tokens is derived, based upon and extending the hedonic pricing framework of Rosen (1974) in a partial equilibrium framework. It is shown that individual roles (or characteristics) of a token may be priced by inverting in a special way the relationship between the token’s aggregate quantity and its provision of characteristics. Interaction between a monopolistic token seller and a representative buyer results in an equilibrium that clears both the aggregate token market and the characteristic market. Particular attention is given to the case in which a token possesses a security role, as this has been a focus of existing discussions regarding the regulation of the cryptocurrency market. JEL Codes: D46, C60. Date: 2018-09-23 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:osf:socarx:wdg2v Access Statistics for this paper More papers in SocArXiv from Center for Open Science |
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