Cryptocurrencies in the Global Economy

Abstract

Among the most important fintech innovations are Bitcoins, other cryptocurrencies, and initial coin offerings (ICOs). Other innovations include smart contracts, blockchain, Internet applications, mobile payments, and so forth. There are almost 2,000 cryptocurrencies in existence as of 2018. The advent of cryptocurrency is a major reason for many to believe that blockchains would become a potential mainstream financial technology for the future.

Cryptocurrencies have exhibited tremendous volatility—thus, cryptoassets are risky investments. Regulators are exploring the type of regulatory changes that would be needed to close the current loopholes and whether to issue their own central bank digital currency (CBDC). In addition to implications related to the illicit financial activities (such as money laundering), there have also been concerns around the impact of cryptocurrencies on the effectiveness of monetary policy and the overall financial stability.