By Thomas Gebhart. University of Minnesota.

We build a model of competition among privately issued cryptocurrencies. We use a well-known monetary economics environment, the Lagos-Wright model, and include founders who can issue their own currencies in order to maximize their utility. Founders are endowed with productive capital that allows them to invest in projects that span multiple periods. We find that the presence of productive capital allows for global equilibrium under free entry assumptions. Without productive capital, we find that a continuum of stable and unstable equilibrium solutions exist within the same model framework.

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