What Factors Give Cryptocurrencies Their Value

Adam Hayes
Written By SCEPA

WORKING PAPER

DOWNLOAD PDF

(481 KB)

This paper aims to identify the likely source(s) of value that cryptocurrencies exhibit in the marketplace using cross sectional empirical data examining 66 of the most used such 'coins'.

A regression model was estimated that points to three main drivers of cryptocurrency value: the aggregate computational power employed in mining for units of the cryptocurrency; the rate of unit production; and the cryptologic algorithm used for the protocol. The resulting model can be used to better understand the drivers of value observed in cryptocurrencies. These findings may also have implications in understanding other assets such as commodity forms of money.

SCEPA
Previous

TTIP - A Good Deal?
Next

Some Progress, Not Enough Broad Prosperity