• Table of Contents
    • Abstract
    • Keywords
    • Article
      • Technical overview
        • Double spending
          • Byzantine Generals Problem
      • The economics of cryptocurrency
        • Governance
          • Algorithmic governance
          • Open source governance
        • Medium of exchange versus unit of account
        • Pseudonymity and censorship resistance
        • Pricing and volatility
      • Conclusion
    • See Also
    • Bibliography
    • How to cite this article


Eli Dourado and Jerry Brito
From The New Palgrave Dictionary of Economics, Online Edition, 2014
Edited by Steven N. Durlauf and Lawrence E. Blume
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For most of history, humans have used commodity currency. Fiat currency is a more recent development, first used around 1000 years ago, and today it is the dominant form of money. But this may not be the end of monetary history. Cryptocurrency is neither commodity money nor fiat money – it is a new, experimental kind of money. The cryptocurrency experiment may or may not ultimately succeed, but it offers a new mix of technical and monetary characteristics that raise different economic questions than other kinds of currency.
This article explains what cryptocurrency is and begins to answer the new questions that it raises. To understand why cryptocurrency has the characteristics it has, it is important to understand the problem that is being solved. For this reason, we start with the problems that have plagued digital cash in the past and the technical advance that makes cryptocurrency possible. Once this foundation is laid, we discuss the unique economic questions that the solution raises.
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How to cite this article

Dourado, Eli and Jerry Brito. "cryptocurrency." The New Palgrave Dictionary of Economics. Online Edition. Eds. Steven N. Durlauf and Lawrence E. Blume. Palgrave Macmillan, 2014. The New Palgrave Dictionary of Economics Online. Palgrave Macmillan. 17 January 2018 <http://www.dictionaryofeconomics.com/article?id=pde2014_C000625> doi:10.1057/9780230226203.3924

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