Stablecoins: The quest for a low-volatility cryptocurrency
Book Chapter by Aleksander Berentsen and Fabian Schär in A. Fatas (ed.) The Economics of Fintech and Digital Currencies
The 2008 article “Bitcoin: a Peer-To-Peer Electronic Cash System” by Satoshi Nakamoto (Nakamoto 2008) is the most influential contribution to monetary economics of the last 50 years. Interestingly and perhaps tellingly, the article was published in 2008 via a mailing list for cryptography and not in a peer-reviewed scientific journal. The Bitcoin paper and the corresponding software implementation connect several technological components to create a virtual asset that is substantially different from any other asset. For the first time, ownership of virtual property is possible without the need for a central authority – a development with the potential to fundamentally change the current financial system and many areas in both the public and the private sectors (Berentsen and Schär, 2017, 2018).