EconPapers    
Economics at your fingertips  
 

Hedonic pricing of cryptocurrency tokens

Jamsheed Shorish ()

Digital Finance, 2019, vol. 1, issue 1, 163-189

Abstract: 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 (J Polit Econ 82(1):34–55, https://doi.org/10.1086/260169, 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.

Keywords: Cryptocurrency; Blockchain; Token economics; Hedonic pricing; Moore–Penrose inverse (search for similar items in EconPapers)
JEL-codes: D46 C60 (search for similar items in EconPapers)
Date: 2019
References: Add references at CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://link.springer.com/10.1007/s42521-019-00005-y Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
Working Paper: Hedonic Pricing of Cryptocurrency Tokens (2018) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:digfin:v:1:y:2019:i:1:d:10.1007_s42521-019-00005-y

Ordering information: This journal article can be ordered from
https://www.springer.com/finance/journal/42521

Access Statistics for this article

Digital Finance is currently edited by Wolfgang Karl Härdle, Steven Kou and Min Dai

More articles in Digital Finance from Springer
Bibliographic data for series maintained by Sonal Shukla ().

 
Page updated 2020-01-11
Handle: RePEc:spr:digfin:v:1:y:2019:i:1:d:10.1007_s42521-019-00005-y