From the course: Foundations of Business Banking

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Cryptocurrency

Cryptocurrency

From the course: Foundations of Business Banking

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Cryptocurrency

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- Cryptocurrency is a decentralized electronic currency whose existence and ownership are documented through cryptographically secure data in a blockchain. Now, here are three necessary characteristics of a reliable currency. Reasonable limit on supply of the currency. Verifiable. And broadly acceptable. Now, before we get to cryptocurrency, let's think about each of these three characteristics with respect to gold and to United States' $100 bills. First, reasonable limit on supply. Gold is tough to mine. I myself have been two miles down in a gold mine in South Africa. So the world is not going to be suddenly flooded with gold. With $100 bills and all other forms of US money, the supply is limited by the policies of the US central bank, the Federal Reserve. If we trust the Federal Reserve to set good policies then US currency is a reliable currency. Next, verifiable. Now there are chemical tests that can confirm the…

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