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Speech
U.S. Regulations and Approaches to Cryptocurrencies
Remarks at the BIS Central Bank Legal Experts’ Meeting, Basel, Switzerland
Tokens vs. Accounts: Why the Distinction Still Matters
Computer science experts may say the difference is irrelevant in the digital world. But when it comes to payments, distinguishing the two still has value in the real world.
Working Paper
Eggs in One Basket: Security and Convenience of Digital Currencies
Digital currencies store balances in anonymous electronic addresses. We analyze the trade-offs between safety and convenience of aggregating balances in addresses, electronic wallets and banks. In our model agents balance the risk of theft of a large account with the cost to safeguarding a large number of passwords of many small accounts. Account custodians (banks, wallets and other payment service providers) have different objectives and tradeoffs on these dimensions; we analyze the welfare effects of differing industry structures and interdependencies, and in particular the consequences ...
Working Paper
Beyond the Doomsday Economics of “Proof-of-Work” in Cryptocurrencies
This paper discusses the economics of how Bitcoin achieves data immutability, and thus payment finality, via costly computations, i.e., ?proof-of-work.? Further, it explores what the future might hold for cryptocurrencies modelled on this type of consensus algorithm. The conclusions are, first, that Bitcoin counterfeiting via ?double-spending? attacks is inherently profitable, making payment finality based on proof-of-work extremely expensive. Second, the transaction market cannot generate an adequate level of ?mining? income via fees as users free-ride on the fees of other transactions in a ...
Speech
Considerations on the Road Ahead for Monetary Policy Implementation
Remarks at the New York Fed and Columbia SIPA Monetary Policy Implementation Workshop, New York City.
Speech
The first line of defense and financial crime: keynote Address at the 1LoD Summit, New York City
Keynote Address at the 1LoD Summit, New York City.
Discussion Paper
The Future of Payments Is Not Stablecoins
Stablecoins, which we define as digital assets used as a medium of exchange that are purported to be backed by assets held specifically for that purpose, have grown considerably in the last two years. They rose from a market capitalization of $5.7 billion on December 1, 2019, to $155.6 billion on January 21, 2022. Moreover, a market that was once dominated by a single stablecoin—Tether (USDT)—now boasts five stablecoins with valuations over $1 billion (as of January 21, 2022; data about the supply of stablecoins can be found here). Analysts have started to pay increased attention to the ...
Briefing
A Historical Perspective on Digital Currencies
This article reviews private currencies in U.S. history to shed light on the contemporary issue of digital currencies. This perspective suggests that government interventions have a critical role in creating a well-functioning money and payments system. Particularly, a central bank digital currency (CBDC) can be a useful tool to supplement regulation in addressing long-standing concerns and risks associated with private currencies.
Journal Article
The Blockchain Revolution: Decoding Digital Currencies
Cryptocurrencies and decentralized finance have grown considerably since the publication of the white paper on bitcoin in 2009. This article presents an overview of cryptocurrencies, blockchain technology, and their applications, explaining the spirit of the enterprise and how it compares with traditional operations. We discuss money, digital money, and payments; cryptocurrencies, blockchain, and the double-spending problem of digital money; decentralized finance; and central bank digital currency.
Speech
Welcoming Remarks
St. Louis Fed President Jim Bullard welcomed Eswar S. Prasad, who delivered the 2022 Homer Jones Memorial Lecture. Prasad is Tolani Senior Professor of Trade Policy and professor of economics at Cornell University. He is also a senior fellow at the Brookings Institution. Prasad’s 2021 book, The Future of Money: How the Digital Revolution Is Transforming Currencies and Finance, was the subject of his lecture.