Why fixed costs matter for proof-of-work based cryptocurrencies / by Rodney J. Garratt and Maarten R.C. van Oordt.: FB3-5/2020-27E-PDF
"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.
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| Department/Agency | Bank of Canada, issuing body. |
|---|---|
| Title | Why fixed costs matter for proof-of-work based cryptocurrencies / by Rodney J. Garratt and Maarten R.C. van Oordt. |
| Series title | Staff working paper = Document de travail du personnel, 1701-9397 ; 2020-27 |
| Publication type | Series - View Master Record |
| Language | [English] |
| Format | Electronic |
| Electronic document | |
| Note(s) | Cover title. "Last updated: June 18, 2020." Includes bibliographical references (pages 33-35). |
| Publishing information | Ottawa, Ontario, Canada : Bank of Canada = Banque du Canada, 2020. ©2020 |
| Author / Contributor | Garratt, Rodney John,1963- author. |
| Description | 1 online resource (ii, 42 pages) : graphs. |
| Catalogue number |
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| Subject terms | Electronic commerce -- Canada. Commerce électronique -- Canada. |
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