Jonathan Chiu, Bank of Canada - September 28, 2018

Posted on 2018-09-19 in News, Events, Upcoming Seminars
Sep 28, 2018



September 28, 2018

Jonathan Chiu, Bank of Canada, will present a seminar at 4:00 PM in Arts 104


Title: The Economics of Cryptocurrencies - Bitcoin and Beyond

Abstract:  How well can a cryptocurrency serve as a means of payment? We study the optimal design of cryptocurrencies and assess quantitatively how well such currencies can support bilateral trade. The challenge for cryptocurrencies is to overcome double-spending by relying on competition to update the blockchain (costly mining) and by delaying settlement. We estimate that the current Bitcoin scheme generates a large welfare loss of 1.4% of consumption. This welfare loss can be lowered substantially to 0.08% by adopting an optimal design that reduces mining and relies exclusively on money growth rather than transaction fees to finance mining rewards. We also point out that cryptocurrencies can potentially challenge retail payment systems provided scaling limitations can be addressed.


This seminar is part of the Department of Economics Seminar Series. Everyone is welcome.

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