Economic Simulation of Cryptocurrencies and Their Control Mechanisms

Abstract

A cryptocurrency needs a relatively stable value if it is to fulfill the traditional functions of money and be useful as a currency. To achieve this, controls are needed within the ecosystem of the cryptocurrency. Although a simulation cannot predict future currency rates or other variables exactly, it is argued that a model that simulates a range of challenging behavior can be a useful testbed for control schemes. To illustrate and explore this idea, an agent-based economic model was used to simulate the early period of a hypothetical cryptocurrency and test two control mechanisms. The results suggest that this approach may be fruitful and that it may be important to include more than just coin minting within the control scheme. An economic simulation model is likely to be a valuable tool in developing and regulating effective cryptocurrency systems.

Regulatory constraints, responsibilities and consultation (CRC) for legal institutionalization of cryptocurrencies in Pakistan

“…A connection between theory and application is made through this connection. Researchers may acquire vital information and evaluate the effectiveness of cryptocurrency regulatory schemes through simulations (Mainelli et al , 2019). Another strategy involves encouraging cooperation between academics and business professionals.…”

Essays in alternative money, banking, finance

“…Of course, monetary models for stabilizing the price of cryptocurrencies have been developed as in Mainelli et al (2019). Increasing attention gain lately the new breed of cryptocurrencies that are pegged to an anchor and referred to as "stablecoins" (Caginalp, 2018).…”