Understanding Cryptocurrencies

39 Pages Posted: 29 Apr 2019 Last revised: 5 Aug 2019

See all articles by Wolfgang K. Härdle

Wolfgang K. Härdle

Humboldt University of Berlin - Institute for Statistics and Econometrics; Xiamen University - Wang Yanan Institute for Studies in Economics (WISE); Charles University; Humboldt University of Berlin - Center for Applied Statistics and Economics (CASE)

Campbell R. Harvey

Duke University - Fuqua School of Business; National Bureau of Economic Research (NBER)

Raphael C. G. Reule

International Research Training Group 1792

Date Written: March 26, 2019

Abstract

Cryptocurrency refers to a type of digital asset that uses distributed ledger, or blockchain, technology to enable a secure transaction. Although the technology is widely misunderstood, many central banks are considering launching their own national cryptocurrency. In contrast to most data in financial economics, detailed data on the history of every transaction in the cryptocurrency complex are freely available. Furthermore, empirically-oriented research is only now beginning, presenting an extraordinary research opportunity for academia. We provide some insights into the mechanics of cryptocurrencies, describing summary statistics and focusing on potential future research avenues in financial economics.

Keywords: Cryptocurrency, Blockchain, Bitcoin, Economic Bubble, Microstructure, Exchange-Based Trading, Peer-to-Peer, Finance, Cryptographic Hashing, Consensus, Proof-of-Work, Proof-of-Stake, Volatility, Gold, S&P 500, Bitcoin Futures, Derivatives, Hedging, Cryptocurrency Valuation

JEL Classification: C01, C58, E42, E51, G10, K24, K42, L86, O31

Suggested Citation

Härdle, Wolfgang K. and Harvey, Campbell R. and Reule, Raphael C. G., Understanding Cryptocurrencies (March 26, 2019). Available at SSRN: https://ssrn.com/abstract=3360304 or http://dx.doi.org/10.2139/ssrn.3360304

Wolfgang K. Härdle

Humboldt University of Berlin - Institute for Statistics and Econometrics ( email )

Unter den Linden 6
Berlin, D-10099
Germany

Xiamen University - Wang Yanan Institute for Studies in Economics (WISE) ( email )

A 307, Economics Building
Xiamen, Fujian 10246
China

Charles University ( email )

Celetná 13
Dept Math Physics
Praha 1, 116 36
Czech Republic

Humboldt University of Berlin - Center for Applied Statistics and Economics (CASE)

Unter den Linden 6
Berlin, D-10099
Germany

Campbell R. Harvey

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States
919-660-7768 (Phone)

HOME PAGE: http://www.duke.edu/~charvey

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Raphael C. G. Reule (Contact Author)

International Research Training Group 1792 ( email )

Unter den Linden 6
Berlin, AK Berlin 10099
Germany
+49 30 2093 99469 (Phone)

HOME PAGE: http://irtg1792.hu-berlin.de

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