Cryptocurrencies: Applications, Complications and Solutions

Jacob Graubæk Houlberg ()
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Jacob Graubæk Houlberg: University of Copenhagen, Postal: University of Copenhagen

Nationaløkonomisk tidsskrift, 2019, vol. 2019, issue 1, 24

Abstract: This article explores the possibility of improving the overall adoption and usability of cryptocurrencies in a given economy. By focusing on cryptocurrencies as a medium of exchange, the complications hindering them from gaining widespread adoption are analyzed in details. Volatility is identified as a natural adoption barrier as it gives rise to currency risk, and a solution to it, in the form of a stablecoin, is brought forward. In particular, the proposed stablecoin utilizes an arbitrage enforced price ceiling and changes in supply/demand to act as price pressure mechanisms that pressures the market price towards its intended level.

Keywords: Cryptocurrency; blockchain; price volatility; stablecoin; smart contract (search for similar items in EconPapers)
JEL-codes: E51 G10 G21 G23 (search for similar items in EconPapers)
Date: 2019
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