00000nam 2200000zi 4500 9.889137 CaOODSP 20221107172208 m o d f cr |n||||||||| 200709t20202020oncd ob f000 0 eng d CaOODSP eng rda CaOODSP n-cn--- FB3-5/2020-27E-PDF Garratt, Rodney John, 1963- author. Why fixed costs matter for proof-of-work based cryptocurrencies / by Rodney J. Garratt and Maarten R.C. van Oordt. Ottawa, Ontario, Canada : Bank of Canada = Banque du Canada, 2020. ©2020 1 online resource (ii, 42 pages) : graphs. text txt rdacontent computer c rdamedia online resource cr rdacarrier Staff working paper = Document de travail du personnel, 1701-9397 ; 2020-27 Cover title. "Last updated: June 18, 2020." Includes bibliographical references (pages 33-35). "We assess how the cost structure of cryptocurrency mining affects the response of miners to exchange rate fluctuations and the immutability of cryptocurrency ledgers that rely on proof-of-work. We show that the amount of mining power supplied to currencies that rely on application-specific integrated circuits (ASICs), such as Bitcoin, responds less to adverse exchange rate shocks than other currencies respond to such shocks, a fact that is instrumental to avoiding double-spending attacks. The results may change if mining equipment used for one cryptocurrency can be transferred to another. For smaller currencies with low exchange rate correlation, transferability eliminates the protection that fixed costs provide. Our results weaken doomsday predictions for Bitcoin and other cryptocurrencies with declining block rewards"--Abstract. Electronic commerce Canada. Commerce électronique Canada. Bank of Canada, issuing body. Staff working paper (Bank of Canada) 2020-27. (CaOODSP)9.806221 PDF 559 KB https://publications.gc.ca/collections/collection_2020/banque-bank-canada/FB3-5-2020-27-eng.pdf