Cryptocurrencies, Network Effects, and Switching Costs

Luther, William J.

doi:10.1111/coep.12151

Cited by 140 publications

(68 citation statements)

References 58 publications

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“…The only possibility to replace the existing currencies exists, according to Luther (2016a), in countries with very weak and poorly managed currencies. In other cases, network effects exist, in the sense that the value of using a particular currency depends on the number of other users who are ready to transact in that currency (Luther, 2016b). Cryptocurrencies may have, however, other uses which do not necessarily require their widespread adoption.…”

Section: Blockchain Technology and Its Potential To Change Business Mmentioning

confidence: 99%

How Can Blockchain Technology Disrupt the Existing Business Models?

Nowiński

Kozma

2017

EBER

210

120

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A B S T R A C T Objective:The main purpose of the paper is to show that blockchain technology may disrupt the existing business models and to explore how this may occur. Research Design & Methods: This is a theory development paper which relies on a literature review and desk re-search. The discussion of the reviewed sources leads to the formulation of three re-search propositions. Findings: The paper provides a short overview of key literature on business models and business model innovation, indicating, among others, that new technologies may be one of the drivers of business model innovation. This study also provides an overview of blockchain technology and a range of its business applications showing how it can disrupt business models. It is shown that blockchain technology may affect many dimensions of business models. We propose that there are three crucial ways in which blockchain technology can affect and disrupt business models: by authenticating traded goods, via disintermediation and via lowering transaction costs. Implications & Recommendations:This study shows that blockchain technology may affect diverse dimensions of business models in diverse industries. It is recommended that mangers should follow developments in this field in order to prepare for possible disruptions in their industries. Contribution & Value Added:This study provides an analysis of the possible impact of blockchain technology on business model innovation. Blockchain technology is gaining momentum with more and more diverse applications, as well as increasing numbers of actors involved in its applications. This paper contributes to our understanding of the possible applications of blockchain technology to businesses, and in particular to its impact on business models. Article type: research paper

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Section: Blockchain Technology and Its Potential To Change Business Mmentioning

confidence: 99%

How Can Blockchain Technology Disrupt the Existing Business Models?

Nowiński

Kozma

2017

EBER

210

120

View full text Add to dashboard Cite

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“…Only very few attempts have been made so far in order to model the cryptocurrency market as a whole. Luther [17] studied why cryptocurrencies failed to gain widespread acceptance using a simple agent model. The proposed a model in which crypto-anarchists, computer gamers, tech savy and black market agents derive a specific utility by using the fiat currency or the crypto currency.…”

Section: Related Workmentioning

confidence: 99%

Using an artificial financial market for studying a cryptocurrency market

Cocco

Concas

Marchesi

2015

J Econ Interact Coord

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Abstract-This paper presents an agent-based artificial cryptocurrency market in which heterogeneous agents buy or sell cryptocurrencies, in particular Bitcoins. In this market, there are two typologies of agents, Random Traders and Chartists, which interact with each other by trading Bitcoins. Each agent is initially endowed with a finite amount of crypto and/or fiat cash and issues buy and sell orders, according to her strategy and resources. The number of Bitcoins increases over time with a rate proportional to the real one, even if the mining process is not explicitly modelled.The model proposed is able to reproduce some of the real statistical properties of the price absolute returns observed in the Bitcoin real market. In particular, it is able to reproduce the autocorrelation of the absolute returns, and their cumulative distribution function. The simulator has been implemented using object-oriented technology, and could be considered a valid starting point to study and analyse the cryptocurrency market and its future evolutions.

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“…Luther (Forthcoming, b) explains why bitcoin is unlikely to be adopted in the absence of significant monetary instability or government support. See also Luther and White () and Luther (Forthcoming, a).…”

mentioning

confidence: 99%

The Political Economy of Bitcoin

2015

Self Cite

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The recent proliferation of bitcoin has been a boon for users but might pose problems for governments. Indeed, some governments have already taken steps to ban or discourage the use of bitcoin. In a model with endogenous matching and random consumption preferences, we find multiple monetary equilibria including one in which bitcoin coexists with official currency. We then identify the conditions under which government transactions policy might deter the use of bitcoin. We show that such a policy becomes more difficult if some users strictly prefer bitcoin because they can avoid other users holding the official currency in the matching process. (JEL C78, E41, E42, E50)

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Cryptocurrencies, Network Effects, and Switching Costs

Cited by 140 publications

References 58 publications

How Can Blockchain Technology Disrupt the Existing Business Models?

How Can Blockchain Technology Disrupt the Existing Business Models?

Using an artificial financial market for studying a cryptocurrency market

The Political Economy of Bitcoin

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