Hayekian Hurdles: Challenges to Cryptocurrency as a Viable Basis for a New Monetary Order

Luís Pedro Freitas, Jorge Cerdeira () and Diogo Lourenço
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Luís Pedro Freitas: Faculty of Economics, University of Porto, Rua Dr. Roberto Frias s/n, 4200-464 Porto, Portugal
Jorge Cerdeira: IS-UP, Faculty of Arts and Humanities, University of Porto, Via Panorâmica s/n, 4150-564 Porto, Portugal
Diogo Lourenço: CEF.UP, Faculty of Economics, University of Porto, Rua Dr. Roberto Frias s/n, 4200-464 Porto, Portugal

Economies, 2025, vol. 13, issue 1, 1-17

Abstract: The rise of cryptocurrencies over the past decade has promised to challenge the dominance of fiat money systems and reshape monetary policy. However, recent developments, including market volatility and the collapse of key exchanges like FTX, have eroded public trust, raising skepticism of a feasible transition to a crypto-based monetary system. This paper explores why cryptocurrencies have not met the expectations of their proponents, particularly those who saw them as a step towards Friedrich Hayek’s vision for competitive currency issuance. While cryptocurrencies reflect some aspects of Hayek’s model, their instability—especially in Bitcoin-like assets—undermines their role as a reliable alternative to fiat money. The paper also considers how central bank independence and regulatory gaps further hinder the development of a robust cryptocurrency framework. Despite the continued relevance of Hayek’s ideas in today’s monetary landscape, the entrenched structures of modern central banks and the rise of Central Bank Digital Currencies suggest that a decentralised currency order remains unlikely in the near future.

Keywords: cryptocurrencies; Hayek; currency competition; currency adoption; monetary evolution (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2025
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