The Cryptocurrency Frontier in Monetary Engineering

Posted: 12 Oct 2014 Last revised: 27 Oct 2020

See all articles by Ferdinando M. Ametrano

Ferdinando M. Ametrano

Digital Gold Institute; CheckSig; Università Milano Bicocca - Crypto Asset Lab; Università Milano-Bicocca - Department of Statistics and Quantitative Methods; Catholic University of Milan (Brescia); QuantLib

Date Written: October 27, 2020


Bitcoin is a scarce digital asset: more of a cryptocommodity than a cryptocurrency, it represents the equivalent of digital gold. It is used as money, as gold has always been, but it is not a good unit of account: extreme deflationary price instability has hampered its usability, making it impractical for spot transactions and unfit for deferred payments. Ametrano (2014) has proposed as Hayek Money a cryptocurrency price stability paradigm of elastic non-discretionary monetary policy. An implementation using a dual asset ledger for stable coins and seigniorage shares is presented here. A Reserve Asset Bank is introduced as active market agent using bitcoin as reserve asset to preserve the coin purchasing power stability. Double spending is prevented using proof-of-payment, the equivalent of proof-of-work where the off-chain consumption of hardware and power resources is replaced by bitcoin payments to the Reserve Asset Bank.

This schema frees coins from any speculative value, thus favoring money velocity and increasing the number of transactions. Seigniorage shares are effectively to be considered as a participation in a distributed central bank: as such the owners are entitled to seigniorage revenues in exchange for being subjected to the losses associated to coin price stability defense, obliged to validation task duties, and in charge of price index observation.

Keywords: bitcoin, Hayek, cryptocurrency, inflation, deflation, monetary policy, Hayek Money, Seigniorage Shares, Decentralized Reserve Bank, Proof-of-Payment

JEL Classification: A10, B00, C70, E31, E41, E42, E51, E52, E58, F00, F31, F34, F41, H00, N00, O00, P00, Z00

Suggested Citation

Ametrano, Ferdinando M., The Cryptocurrency Frontier in Monetary Engineering (October 27, 2020). Available at SSRN: or

Ferdinando M. Ametrano (Contact Author)

Digital Gold Institute ( email )



CheckSig ( email )

Milan, 20121


Università Milano Bicocca - Crypto Asset Lab ( email )



Università Milano-Bicocca - Department of Statistics and Quantitative Methods ( email )

Milano, 20126

Catholic University of Milan (Brescia) ( email )


QuantLib ( email )


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