The Microeconomics of Cryptocurrencies
Since its launch in 2009 much has been written about Bitcoin, cryptocurrencies and blockchains. While the discussions initially took place mostly on blogs and other popular media, we now are witnessing the emergence of a growing body of rigorous academic research on these topics. By the nature of the phenomenon analyzed, this research spans many academic disciplines including macroeconomics, law and economics and computer science. This survey focuses on the microeconomics of cryptocurrencies themselves. What drives their supply, demand, trading price and competition amongst them. This literature has been emerging over the past decade and the purpose of this paper is to summarize its main findings so as to establish a base upon which future research can be conducted.
We are also grateful to Bruno Biais, Eric Budish, Michael Dickstein, Ben Fung, Rod Garratt, Jorge Cruz Lopez and Cyrus Minwalla for their comments and suggestions. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Joshua S. Gans
I have consulted for ORBS, Jed McCaleb and Tether on cryptocurrencies issues. I also work with the Creative Destruction Lab at the University of Toronto and lead its Blockchain stream.