Are Cryptocurrencies a More Equitable Form of Money?
40 Pages Posted: 22 Apr 2019
Date Written: March 22, 2019
The governance of the fiat money system via democratically elected government and financial institutions aims to ensure that all can transact fairly and safely with confidence in the stability and viability of that system in an equitable manner for all citizens. Rawls (1971) suggested that the principle of “equal liberty” and “fair equality of opportunity” was important to the achievement of the common interest. But the global crisis of 2008 brought into question the fairness of capitalism utilising fiat money. Cryptocurrencies have been proposed as an alternative form of money motivated on the basis of giving users greater fairness and equity than existing fiat money. This paper considers these claims with an analysis that demonstrates that in practice cryptocurrencies are more susceptible to the ‘tragedy of the commons’ due to governance problems and contradictions of claimed benefits. We apply the theoretic framework of Elinor Ostrom (2005) and suggest ways to improve fairness by addressing governance issues to ensure that more equitable objectives are achieved.
Keywords: cryptocurrencies, money, ethics of money
JEL Classification: E42, E40, B53
Suggested Citation: Suggested Citation