Advertisement

Can Cryptocurrencies Help to Pave the Way to a More Sustainable Economy? Questioning the Economic Growth Paradigm

  • David LeonardEmail author
  • Horst Treiblmaier
Chapter

Abstract

The emergence of blockchain technology entails myriad implications for actors across a diverse set of industry sectors. Focusing on the blockchain as the data structure underlying cryptocurrencies, this chapter explores the potential of this technology to contribute to the broader societal goals of inter- and intra-generational equity commonly convened under the banner of sustainability. In particular, we examine how cryptocurrencies may alleviate a fundamental institutional driver for economic growth and facilitate the maintenance of a sustainable steady-state economy by displacing demand for debt-based money as a medium of exchange. In building this case, the chapter begins by considering the inexorable limits to economic growth implied by the bio-physical realities of our planet, and the inability of our current monetary systems to function effectively within these limits. The discussion then turns to the ways in which political reforms and alternative currencies could overcome this problem, before exploring the various advantages of cryptocurrencies over many of the alternative options. This line of argumentation amounts to a strong case for the further development of blockchain technologies and especially cryptocurrencies, and one which may appeal to individuals far beyond the spheres of IT, business, and finance.

Keywords

Cryptocurrency Sustainability Sustainable economy Economic growth Natural limits Limited resources Throwaway society Weak sustainability Strong sustainability Growth paradigm Steady-state economy Money supply Fractional reserve banking Reserve ratio Alternative money systems International Monetary Fund (IMF) Complementary currency Debt-based money supply Bitcoin Fiat money Positive money Deflation Silvio Gesell Satoshi Nakamoto Byzantine fault tolerance 

References

  1. Ametrano, F. M. (2016). Hayek Money: The Cryptocurrency Price Stability Solution. Retrieved January 10, 2018, from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2425270
  2. Antonopoulos, A. M. (2016). The Internet of Money: A Collection of Talks by Andreas M. Antonopoulos (Vol. 1). Merkle Bollom LLC.Google Scholar
  3. Baliga, A. (2017). Understanding Blockchain Consensus Models. Pune: Whitepaper, Persistent Systems.Google Scholar
  4. Banco Central do Brasil. (2018). Reserve Requirements. Retrieved February 19, 2017, from https://www.bcb.gov.br/POM/SPB/Ing/ReserveRequirements_PrimaryRules.pdf
  5. Benes, J., & Kumhof, M. (2012). The Chicago Plan Revisited (IMF Working Paper No. 12/202).Google Scholar
  6. Boonstra, L., Klamer, A., Karioti, E., Do Carmo, J. D., & Geenen, S. (2013). Complementary Currency Systems: Social and Economic Effects of Complementary Currencies. Rotterdam: Erasmus Universiteit Rotterdam.Google Scholar
  7. Busch, K. (2010). World Economic Crisis and the Welfare State. International Policy Analysis. Berlin: Friedrich-Ebert-Stiftung.Google Scholar
  8. Buyst, E., Danneel, M., Maes, I., & Pluym, W. (2005). The Bank, the Franc and the Euro. A History of the National Bank of Belgium. Tielt: Racine Press.Google Scholar
  9. Chohan, U. W. (2017, September 20). Assessing the Differences in Bitcoin & Other Cryptocurrency Legality Across National Jurisdictions. Retrieved December 20, 2017, from  https://doi.org/10.2139/ssrn.3042248
  10. Coinmarketcap. (2018). Cryptocurrency Market Capitalizations. Retrieved February 16, 2018, from https://coinmarketcap.com/all/views/all/
  11. Cojanu, V. (2009). Georgescu-Roegen’s Entropic Model: A Methodological Appraisal. International Journal of Social Economics, 36(3), 274–286.CrossRefGoogle Scholar
  12. Cryptocoinmastery. (2017). What Happens When All 21,000,000 Bitcoins Have Been Mined? Retrieved February 16, 2018, from http://cryptocoinmastery.com/what-happens-when-all-21,000,000-bitcoins-have-been-mined/
  13. Dale, G. (2012). The Growth Paradigm: A Critique. International Socialism, 134. Retrieved February 7, 2018, from http://isj.org.uk/the-growth-paradigm-a-critique/
  14. Daly, H. E. (1991). Steady-State Economics. Washington, DC: Island Press.Google Scholar
  15. Daly, H. E. (2005). Economics in a Full World. Scientific American, 293(3), 100–107.CrossRefGoogle Scholar
  16. Desjardins, J. (2015). Infographic: The Properties of Money. The Money Project. Retrieved February 16, 2018, from http://money.visualcapitalist.com/infographic-the-properties-of-money/
  17. Douthwaite, R. (2006). The Ecology of Money. Cambridge: Green Books.Google Scholar
  18. Dyson, B. (2014). Positive Money: How to Fix the Creation of Money? Green European Journal, 7. Retrieved February 7, 2018, from https://www.greeneuropeanjournal.eu/positive-money-how-to-fix-the-creation-of-money/
  19. Dyson, B., Hodgson, G., & van Lerven, F. (2016). Sovereign Money: An Introduction. Retrieved January 9, 2018, from positivemoney.org/wp-content/uploads/2016/12/SovereignMoney-AnIntroduction-20161214.pdf
  20. Elmqvist, T., Folke, C., Nyström, M., Peterson, G., Bengtsson, J., Walker, B., & Norberg, J. (2003). Response Diversity, Ecosystem Change, and Resilience. Frontiers in Ecology and the Environment, 1(9), 488–494.CrossRefGoogle Scholar
  21. Farina, A., Johnson, A. R., Turner, S. J., & Belgrano, A. (2003). ‘Full’ World Versus ‘Empty’ World Paradigm at the Time of Globalisation. Ecological Economics, 45, 11–18.CrossRefGoogle Scholar
  22. Federal Reserve. (2017). Reserve Requirements. Retrieved January 9, 2018, from https://www.federalreserve.gov/monetarypolicy/reservereq.htm
  23. Fisher, I. (1935). 100% Money. New York: Adelphi Company.Google Scholar
  24. Georgescu-Roegen, N. (1971). The Entropy Law and the Economic Process. Cambridge, MA: Harvard University Press.CrossRefGoogle Scholar
  25. Georgescu-Roegen, N. (1975). Energy and Economic Myths. Southern Economic Journal, 41(3), 347–381.CrossRefGoogle Scholar
  26. Hardin, G. (1995). Living Within Limits: Ecology, Economics, and Population Taboos. Oxford: Oxford University Press.Google Scholar
  27. Hileman, G. (2014). A History of Alternative Currencies. Retrieved February 5, 2018, from www.hillsdale.edu/wp-content/uploads/2016/02/FMF-2014-A-History-of-Alternative-Currencies.pdf
  28. Huber, J., & Robertson, J. (2000). Creating New Money: A Monetary Reform for the Information Age. London: New Economics Foundation.Google Scholar
  29. Hudson, M. (2012). The Road to Debt Deflation, Debt Peonage, and Neofeudalism (Working Paper 708). Levy Economics Institute of Bard College.Google Scholar
  30. Ilgmann, C. (2015). Silvio Gesell: ‘A Strange, Unduly Neglected’ Monetary Theorist. Journal of Post Keynesian Economics, 38(4), 532–564.CrossRefGoogle Scholar
  31. Kerschner, C. (2010). Economic De-growth Vs. Steady-State Economy. Journal of Cleaner Production, 18(6), 544–551.CrossRefGoogle Scholar
  32. Kremer, S., Bick, A., & Nautz, D. (2013). Inflation and Growth: New Evidence from a Dynamic Panel Threshold Analysis. Empirical Economics, 44(2), 861–878.CrossRefGoogle Scholar
  33. Lo, S., & Wang, C. J. (2014). Bitcoin as Money? Current Policy Perspectives. No. 14-4, Federal Reserve Bank of Boston.Google Scholar
  34. Madhavan, S., & Barrass, R. (2011). Unsustainable development: Could It Be a Ponzi Scheme? Sapiens, 4(1). Retrieved February 7, 2018, from http://journals.openedition.org/sapiens/1083
  35. Meadows, D. H., Randers, J., & Meadows, D. L. (2004). The Limits to Growth: The 30-Year Update. White River Junction: Chelsea Green Publishing Company.Google Scholar
  36. Monnin, P. (2014). Inflation and Income Inequality in Developed Economies (CEP Working Paper 2014/1). CEP: Council on Economic Policies. Retrieved February 3, 2018, from https://www.cepweb.org/.../CEP_WP_Inflation_and_Income_Ine
  37. Murphy, E., Murphy, M., & Seitzinger, M. (2015). Bitcoin: Questions, Answers, and Analysis of Legal Issues. Congressional Research Service. Washington. D.C.Google Scholar
  38. Nakamoto, S. (2008). Bitcoin: A Peer-To-Peer Electronic Cash System. Retrieved August 12, 2017, from https://bitcoin.org/en/bitcoin-paper
  39. Narayanan, A., Bonneau, J., Felten, E., Miller, A., & Goldfeder, S. (2016). Bitcoin and Cryptocurrency Technologies: A Comprehensive Introduction. Princeton: Princeton University Press.Google Scholar
  40. Nicolini, J. P. (2015). Macroeconomic Policy During a Credit Crunch (No. 15-2). Federal Reserve Bank of Minneapolis.Google Scholar
  41. OECD. (2017). OECD Economic Outlook and Interim Economic Outlook. Organization for Economic Co-Operation and Development (OECD). Retrieved February 16, 2018, from http://www.oecd.org/eco/economicoutlook.htm
  42. RBA – Reserve Bank of Australia. (1991). Inquiry into the Australian Banking Industry. Reserve Bank of Australia. Retrieved February 19, 2017, from https://www.rba.gov.au/publications/submissions/financial-sector/inquiry-australian-banking-industry/pdf/inquiry-australian-banking-industry.pdf
  43. Rockstrom, J., et al. (2009). A Safe Operating Space for Humanity. Nature, 461, 472–475.CrossRefGoogle Scholar
  44. Stiglitz, J. E., Sen, A., & Fitoussi, J.-P. (2009). Report by the Commission on the Measurement of Economic Performance and Social Progress. Retrieved December 20, 2017, from www.stiglitz-sen-fitoussi.fr
  45. Wikimedia. (2018). Components of US Monetary Supply, from https://commons.wikimedia.org/wiki/File:Components_of_US_Money_supply.svg
  46. WorldBank. (2017). Broad Money Growth. Retrieved January 6, 2018, from https://data.worldbank.org/indicator/FM.LBL.BMNY.ZG?locations=US&view=chart

Copyright information

© The Author(s) 2019

Authors and Affiliations

  1. 1.Department of Sustainability, Governance, and MethodsMODUL University ViennaViennaAustria
  2. 2.Department of International ManagementMODUL University ViennaViennaAustria

Personalised recommendations