You are looking at a specific version 20211231:213057 of this paper. See the latest version.

Paper 2021/1605

Inflation-Tracking Proof-of-Work Crypto-Currencies

Charanjit S. Jutla

Abstract

We show that Bitcoin and other egalitarian crypto-currencies are unstable as store-of-value as they fail to track inflation of local currencies closely, and the price dynamic is purely driven by speculation. Based on rational expectations equilibrium, we argue that if the coins awarded during mining are increased in proportion to increase in difficulty of the underlying cryptographic puzzle, then the price of the coin is likely to track inflation of local currencies closely over medium to long term. Further, a hyper-geometric tapering, instead of a geometric tapering, of the mining award over time is recommended for bootstrapping interest in the crypto-currency.

Note: Minor edits and added more citations

Metadata
Available format(s)
PDF
Category
Applications
Publication info
Preprint. MINOR revision.
Keywords
Bitcoinconsensusdigital signatureshash chainrational expectationsKeynes
Contact author(s)
csjutla @ us ibm com
History
2021-12-31: revised
2021-12-09: received
See all versions
Short URL
https://ia.cr/2021/1605
License
Creative Commons Attribution
CC BY
Note: In order to protect the privacy of readers, eprint.iacr.org does not use cookies or embedded third party content.