Notes
I am using the fictional definition of teleportation, not the process of moving an object or person by psychokinesis.
The phrase “singleness of the currency” appears in Bank for International Settlements (2003).
In fact, the singleness of the currency is so ingrained in many banking systems that the indemnity of deposit insurance contracts is an equivalent value of deposits at another (solvent) institution. The authors mention that this is true in Switzerland, and it is also true in other countries.
Kahn and Roberds (2009) were the first to highlight that a key distinction between physical and virtual forms of money is that in the former case transaction verification requires verifying the object while in the latter case it requires verifying the identity of transactors.
I take some pleasure in reporting that David Chaum’s affiliation in the 1982 paper cited by the authors is the University of California, Santa Barbara, although we never overlapped.
In such cases the user does not have direct access to the Bitcoin network and instead relies on their “host” (p. 77).
See Garratt (2015) for a related discussion.
In this discussion, the authors state that fixed costs can be ignored in assessing the short-run behavior of miners. Recent work by Garratt and van Oordt (2020) reveals that fixed costs can matter, even in the short run, and that the combination of a high fixed cost and a low alternative use value for specialized mining equipment can lead to a more resilient network.
Garratt and Wallace (2018) point out that the existence of many close substitutes increases the price indeterminacy.
See the announcement by Elon Musk that Tesla will no longer accept Bitcoin: https://twitter.com/elonmusk/status/1392602041025843203/photo/1.
References
Bank for International Settlements. 2003. The Role of Central Bank Money in Payment Systems. Committee on Payment and Settlement Systems https://1lib.us/book/948577/1e5c23?id=948577&secret=1e5c23.
Garratt, Rod. 2015. A Distributed Version of Repugnance as a Constraint on Markets. Liberty Street Economics, Federal Reserve Bank of New York. https://libertystreeteconomics.newyorkfed.org/2015/09/a-distributed-version-of-repugnance-as-a-constraint-on-markets/.
Garratt, Rodney, and Maarten van Oordt. 2020. Why Fixed Costs Matter for Proof-of-Work Based Cryptocurrencies. Bank of Canada Staff Staff Working Paper 2020–27.
Garratt, Rodney, and Neil Wallace. 2018. Bitcoin 1, Bitcoin 2,…: An Experiment in Privately Issued Outside Monies. Economic Inquiry 56 (3): 1887–1897.
Kahn, Charles, and William Roberds. 2009. Why Pay? An Introduction to Payments Economics. Journal of Financial Intermediation 18 (1): 1–23.
Kahn, Charles M., Francesco Rivadeneyra, and Tsz-Nga. Wong. 2020. Should the Central Bank Issue e-Money? Journal of Financial Market Infrastructures 8 (4): 1–22.
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Garratt, R. Fabian Schär and Aleksander Berentsen: Bitcoin, Blockchain, and Cryptoassets: A Comprehensive Introduction. Bus Econ 57, 27–30 (2022). https://doi.org/10.1057/s11369-021-00236-1
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DOI: https://doi.org/10.1057/s11369-021-00236-1