Arbeitspapier
Why fixed costs matter for proof-of-work based cryptocurrencies
We assess how the cost structure of cryptocurrency mining affects the response of miners to exchange rate fluctuations and the immutability of cryptocurrency ledgers that rely on proof-of-work. We show that the amount of mining power supplied to currencies that rely on application-specific integrated circuits (ASICs), such as Bitcoin, responds less to adverse exchange rate shocks than other currencies respond to such shocks, a fact that is instrumental to avoiding double-spending attacks. The results may change if mining equipment used for one cryptocurrency can be transferred to another. For smaller currencies with low exchange rate correlation, transferability eliminates the protection that fixed costs provide. Our results weaken doomsday predictions for Bitcoin and other cryptocurrencies with declining block rewards.
- Sprache
-
Englisch
- Erschienen in
-
Series: Bank of Canada Staff Working Paper ; No. 2020-27
- Klassifikation
-
Wirtschaft
General Financial Markets: General (includes Measurement and Data)
Production, Pricing, and Market Structure; Size Distribution of Firms
- Thema
-
Digital currencies and fintech
Payment clearing and settlement systems
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Garratt, Rod
van Oordt, Maarten R. C.
- Ereignis
-
Veröffentlichung
- (wer)
-
Bank of Canada
- (wo)
-
Ottawa
- (wann)
-
2020
- DOI
-
doi:10.34989/swp-2020-27
- Handle
- Letzte Aktualisierung
- 10.03.2025, 11:43 MEZ
Datenpartner
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
Objekttyp
- Arbeitspapier
Beteiligte
- Garratt, Rod
- van Oordt, Maarten R. C.
- Bank of Canada
Entstanden
- 2020
Ähnliche Objekte (12)
Market size and entry in international trade: Product versus firm fixed costs
The economics of cryptocurrencies: Bitcoin and beyond
Volatility and liquidity costs
Multiple fixed effects in binary response panel data models
Uncertain costs and vertical differentiation in an insurance duopoly
Sterilized intervention in emerging-market economies: Trends, costs, and risks
High-frequency trading and institutional trading costs
Agency costs, risk shocks and international cycles
Measuring limits of Arbitrage in fixed-income markets
Search-for-yield in Canadian fixed-income mutual funds and monetary policy
Merchant acceptance, costs, and perceptions of retail payments: A Canadian survey
Government of Canada fixed-income market ecology
Market size and entry in international trade: Product versus firm fixed costs
The economics of cryptocurrencies: Bitcoin and beyond
Volatility and liquidity costs
Multiple fixed effects in binary response panel data models
Uncertain costs and vertical differentiation in an insurance duopoly
Sterilized intervention in emerging-market economies: Trends, costs, and risks
High-frequency trading and institutional trading costs
Agency costs, risk shocks and international cycles
Measuring limits of Arbitrage in fixed-income markets
Search-for-yield in Canadian fixed-income mutual funds and monetary policy
Merchant acceptance, costs, and perceptions of retail payments: A Canadian survey
Government of Canada fixed-income market ecology
Market size and entry in international trade: Product versus firm fixed costs
The economics of cryptocurrencies: Bitcoin and beyond
Volatility and liquidity costs
Multiple fixed effects in binary response panel data models
Uncertain costs and vertical differentiation in an insurance duopoly
Sterilized intervention in emerging-market economies: Trends, costs, and risks
High-frequency trading and institutional trading costs
Agency costs, risk shocks and international cycles
Measuring limits of Arbitrage in fixed-income markets
Search-for-yield in Canadian fixed-income mutual funds and monetary policy
Merchant acceptance, costs, and perceptions of retail payments: A Canadian survey