Cryptocurrency: the difficult path from de facto to de jure

Abstract

The paper analyses cryptocurrencies and their functions in modern economy. The purpose of the study is to identify the possibilities of cryptocurrency to perform the major functions of money and the conditions under which it can be recognized as a national monetary unit. The author applies historical, logical, comparative and statistical methods of analysis and examines the cryptocurrency in the functions of a measure of value, a means of payment, accumulation. When analyzing the cryptocurrency in the function of world money, its internal contradiction («original sin») is revealed, which prevents its recognition as a national monetary unit and as a means of interstate settlements. The author argues that the most likely possibility of resolving this contradiction is the creation of stablecoins, with two directions on this path. One relates to the Facebook project to create the Libra stablecoin controlled by the community of the largest digital companies but without state involvement. The second one concerns the creation of state-owned cryptocurrencies backed by either fiat money, physical assets, or other digital currencies, the issuance and circulation of which is state controlled. It is this path that demonstrates today high activity of central banks. The findings of the study can be useful in developing the theory of money, and in practical terms — in developing the concept of the digital ruble.