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This paper examines the functioning of virtual currencies as payment systems through crypto-currency exchanges and the likely impact their integration with traditional payment systems may have on the interdependent global payment systems. Being a potential global transformational phenomenon,...
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Digital currencies store balances in anonymous electronic addresses. We analyze the tradeoffs between the safety and convenience of aggregating balances in addresses, electronic wallets and banks. In our model, agents balance the risk of theft of a large account with the cost to safeguarding a...
Persistent link: https://www.econbiz.de/10012421984
Digital platforms, such as Alibaba and Amazon, operate an online marketplace to facilitate transactions. This paper studies a platform's business model choice between accepting cash and issuing tokens, as well as the implications for welfare, resiliency, and interoperability. A cash platform...
Persistent link: https://www.econbiz.de/10012503511
We use a simple model to study whether private payment systems based on bank deposits can provide the optimal level of safety. In the model, bank deposits backed by projects are subject to default risk that can be mitigated by a depositor's ex ante and ex post monitoring. Safe payment...
Persistent link: https://www.econbiz.de/10012388751
The emergence of digital currencies such as Bitcoin and the underlying blockchain and distribution ledger technology …
Persistent link: https://www.econbiz.de/10011759869
We build a network formation game of firms with trade flows to study the adoption and usage of a new digital currency as an alternative to correspondent banking. We document endogenous heterogeneity and inefficiency in adoption outcomes and explain why higher usage may correspond to lower...
Persistent link: https://www.econbiz.de/10014562909
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Our paper contributes to the discussion about the utility of stablecoins for retail payments through an objective, evidence-based approach that compares stablecoins with traditional retail payment methods. The paper also provides insights that could be useful in the design of central bank...
Persistent link: https://www.econbiz.de/10013489726
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