Abstract
Regardless of its ingenuity, Bitcoin is not exempt of some unpleasant externalities (e.g., the high electricity usage), drawbacks that may affect its economic viability (e.g., the deflationary pressure), or limitations due to some technical details (e.g., a low throughput).
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Notes
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McMillan (2013).
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The risk is not zero, though. Each time a block is added to the blockchain the next validator has a certain amount of time to issue the next block, after which a new validator is chosen (in general, for each block, a sequence of validators is chosen that will be used if the first validator fails to propose a new block within a certain time frame). Lack of consensus can occur when, for instance, due to network latencies, the block mined by the first validator arrives shortly after the allowed delay.
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Saleh (2021).
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See Greenberg (2017) and Murphy (2021).
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See Gandal and Halaburda (2016).
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See Gandal et al. (2018).
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Feathercoin’s blockchain can be explored here: https://explorer.feathercoin.com.
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Of course, a similar tipping method could be designed using Bitcoin, given its divisibility. However, the concern would have been that the negative aspects of bitcoin’s reputation would make people less likely to use the currency in this manner (“to do good and to feel good”). Moreover, the denomination matters psychologically: sending or receiving 100 dogecoins may well feel better than, say, 0.00006 bitcoins, even if the value of the gift is the same in the units of the state currency (say, the dollar).
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Luckycoin was a modification of Litecoin with the added feature that randomized the reward for mining a block. The standard reward for each block is 88 luckycoins. However, with a 5% probability the miner could get twice as many, with a 1% probability five times, and with a 0.01% probability, 58 times as many coins as the reward for mining a new block.
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This Reddit group is the same group that launched the rally behind Gamestop’s shares in 2021.
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Although most tokens are issued on Ethereum, some tokens are issued via smart contracts on other blockchains, like Binance Chain, Neo, or Stellar among others.
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The rate was 1 peso for 1 dollar and was maintained until 2001.
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This can happen, for instance, when there is an attack on the coin. This stabilizing mechanism has been used by central banks to peg their currency to other currencies, like Swiss franc pegged to Euro in 2010’s or British pound pegged to Germany’s deutschmark in the early 1990’s. Yet, this mechanism proved to be costly and vulnerable to currency price attacks. The most spectacular such attack was George Soros’ attack on the British pound in 1992.
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In fact, there is no obligation to use a fiat currency. For instance, Digix Gold Token (DGX) is a stablecoin pegged to the price of gold—1 token equals 1 gram of gold, where for each purchase of the token an equivalent amount of gold is stored in a vault in Singapore.
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See Budish et al. (2015).
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See Gandal and Halaburda (2016).
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See Roth (2015).
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Halaburda, H., Sarvary, M., Haeringer, G. (2022). The Rich Landscape of Crypto. In: Beyond Bitcoin. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-88931-9_5
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