Redeemable Platform Currencies

61 Pages Posted: 18 Nov 2019

See all articles by Yang You

Yang You

Harvard University

Kenneth Rogoff

Harvard University - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: November 2019

Abstract

Can massive online retailers such as Amazon and Alibaba issue digital tokens that potentially compete with bank debit accounts? There is a long history of trading stamps and loyalty points, but new technologies are poised to sharply raise the significance of redeemable assets as a store of value. Here we develop a simple stylized model of redeemable tokens that can be used to study sales and pricing strategies for issuing tokens, including ICOs. Our central finding is that platforms can generally earn higher revenues by making tokens non-tradable unless they can generate a sufficiently high outside-platform convenience yield.

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Suggested Citation

You, Yang and Rogoff, Kenneth S., Redeemable Platform Currencies (November 2019). NBER Working Paper No. w26464, Available at SSRN: https://ssrn.com/abstract=3488964

Yang You (Contact Author)

Harvard University ( email )

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Kenneth S. Rogoff

Harvard University - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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