Cryptocurrencies and the new challenges faced by the monetary system: a post-Keynesian perspective

Abstract

In 2008, Satoshi Nakamoto, the pseudonym of an unknown person, launched ‘Bitcoin’, a decentralized cryptocurrency, aiming at circumventing banks or governments and returning to a more ‘austere’ and quantity-controlled monetary system. After Bitcoin, several other cryptocurrencies were created, and a debate on whether these instruments could ever replace what we currently use as ‘money’ surfaced. Ten years since its creation, it is clear that Bitcoin did not reach its main goal but raised important discussions within the framework of Monetary Authorities. Therefore, this work has two main objectives. The first is to show that, from a post-Keynesian theoretical perspective, Bitcoin cannot stand up to fiduciary currencies because it is much closer to being a highly volatile speculative asset than a currency capable of assuming the prime functions in a capitalist economy. The second objective is to point out the consequences of this discussion within the framework of the monetary authorities, with emphasis on the proposals of central bank cryptocurrencies.

Keywords:
Currency; Central Banks; Cryptocurrencies; Monetary economics