Some Economics of Private Digital Currency

Gans, Joshua S.; Hałaburda, Hanna

doi:10.2139/ssrn.2297296

Cited by 42 publications

(45 citation statements)

References 8 publications

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“…O 'Hara, and Slama [2017] all analyze aspects of the Bitcoin environment. Rosenfeld [2011], Eyal and Sirer [2014], Gans and Halaburda [2015], and Gandel and Halaburda [2016] consider various design issues of the Bitcoin protocol mostly focusing on security rather than on the efficiency of the fee mechanism.…”

Section: Introductionmentioning

confidence: 99%

Towards a Functional Fee Market for Cryptocurrencies

et al. 2019

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Blockchain-based cryptocurrencies prioritize transactions based on their fees, creating a unique kind of fee market. Empirically, this market has failed to yield stable equilibria with predictable prices for desired levels of service. We argue that this is due to the absence of a dominant strategy equilibrium in the current fee mechanism. We propose an alternative fee setting mechanism that is inspired by generalized second price auctions. The design of such a mechanism is challenging because miners can use any criteria for including transactions and can manipulate the results of the auction after seeing the proposed fees. Nonetheless, we show that our proposed protocol is free from manipulation as the number of users increases. We further show that, for a large number of users and miners, the gain from manipulation is small for all parties. This results in users proposing fees that represent their true utility and lower variance of revenue for miners. Historical analysis shows that Bitcoin users could have saved $272,528,000 USD in transaction fees while miners could have reduced the variance of fee income by an average factor of 7.4 times.

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Section: Introductionmentioning

confidence: 99%

Towards a Functional Fee Market for Cryptocurrencies

et al. 2019

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“…A particular currency -Bitcoin -has received most of this attention, although there are alternatives in existence such as Litecoin and proposed currencies such as Ripple. Furthermore, there are liabilities being issued by entities such as Amazon and Facebook that might be characterized as digital currencies (Gans and Halaburda 2013).…”

mentioning

confidence: 99%

The economics of Bitcoin and similar private digital currencies

Dwyer

2015

Journal of Financial Stability

634

255

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“…European Central Bank (ECB, 2012), (ECB, 2015), (Draghi, 2015); Congressional Research Service acting on the needs of the US Congress (Murphy et.al. 2015), (Congress, 2014); Canadian Central Bank (Gans and Halaburda, 2013), (BoC, 2014), (Chiu and Wong, 2015), and others. The last group focuses on the application of quantitative methods in the study of bitcoin, for example: (Brandvold et.al., 2015) using the price discovering process studied which of the bitcoin's trading platforms has the most impact on the bitcoin's price and which one is following the general trend.…”

Section: Literature Overviewmentioning

confidence: 99%

Dependency Analysis between Bitcoin and Selected Global Currencies

Szetela

Mentel

Gędek

2016

DEM

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A b s t r a c t. In this research we have tried to identify the relationship between the exchange rate for bitcoin to the leading currencies such as Dollar, Euro, British Pound and Chinese Yuan and Polish zloty as well. We have applied ARMA and GARCH models to model and to analyze the conditional mean and variance. The appliance of GARCH models have identified some dependency in explanation conditional variance between bitcoin and US Dollar, Euro and Yuan, while ARMA analysis have shown no relations between bitcoin and other dependent variables.

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Some Economics of Private Digital Currency

Cited by 42 publications

References 8 publications

Towards a Functional Fee Market for Cryptocurrencies

Towards a Functional Fee Market for Cryptocurrencies

The economics of Bitcoin and similar private digital currencies

Dependency Analysis between Bitcoin and Selected Global Currencies

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