Design and valuation of cyptocurrencies

Eska, Fabian ; Shi, Yanghua ; Theissen, Erik ; Uhrig-Homburg, Marliese

Document Type: Conference presentation
Year of publication: 2023
Conference title: Economics of Financial Technology Conference 2023
Location of the conference venue: Edinburgh, United Kingdom
Date of the conference: 21.-23.06.2023
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Publication language: English
Institution: Business School > ABWL u. Finanzierung (Theissen 2009-)
Subject: 330 Economics
Keywords (English): blockchains , cryptocurrencies , cryptocurrency design , market valuation , LASSO
Abstract: We analyze whether the design of cryptocurrencies helps to explain the huge cross-sectional variation in the market values of cryptocurrencies. We propose a taxonomy of design features and hand-collect data on these features for a sample of 79 cryptocurrencies. Using a two-stage regression approach and LASSO regressions, we find, inter alia, that forks and deviations from the design of Bitcoin are associated with lower valuation. In contrast, non-anonymous cryptocurrencies and cryptocurrencies that do not pass on any transaction fees and/or tips to agents who maintain the integrity of the network have, on average, higher market values. These results are robust to variations in the way we measure market valuation.

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