Cryptocurrencies and Hyperinflation

Abstract

This discussion paper considers the monetary role that cryptocurrencies can play as hedges against the crises stemming from hyperinflation. It also briefly examines such a relationship vis-a-vis currency devaluation and monetary defaults. The findings suggest that, for all the legitimate criticisms volleyed against cryptocurrencies (governance, legal, security), there are indeed certain macroeconomic issues which can draw upon the decentralized, apolitical, and deflationary monetary nature of cryptocurrencies. These advantages must then be weighted by monetary policy practitioners against the risks that still linger in the cryptocurrency space.