Can Cryptocurrencies Become a Commonly Accepted Means of Exchange?

25 Pages Posted: 3 Sep 2020

See all articles by Nicolas Cachanosky

Nicolas Cachanosky

Metropolitan State University of Denver; American Institute for Economic Research

Date Written: July 25, 2020


This chapter studies the challenges a cryptocurrency faces to become a common means of exchange. In particular, the paper discusses the scalability constraint that limits the number of transactions a cryptocurrency may be able to verity per unit of time, the network effect in goods that function as money that increases the cost of new currencies to gain market share, and the implications of the fixed monetary rule present in most cryptocurrencies that departs from an elastic optimal monetary policy. Potential solutions for each case are also discussed.

Keywords: cryptocurrencies, money, common means of exchange

JEL Classification: E42, E59

Suggested Citation

Cachanosky, Nicolas, Can Cryptocurrencies Become a Commonly Accepted Means of Exchange? (July 25, 2020). AIER Sound Money Project Working Paper No. 2020-14, Available at SSRN: or

Nicolas Cachanosky (Contact Author)

Metropolitan State University of Denver ( email )

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American Institute for Economic Research

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