Decrypting New Age International Capital Flows

This paper employs high frequency transactions data on the world’s oldest and most extensive centralized peer-to-peer Bitcoin market, which enables trade in the currencies of more than 135 countries. It presents an algorithm that allows, with high...

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Main Authors:	Graf von Luckner, Clemens, Reinhart, Carmen M., Rogoff, Kenneth
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2021
Subjects:	CRYPTOCURRENCY BITCOIN INTERNATIONAL CAPITAL FLOWS FINANCIAL TRANSACTIONS SPECULATIVE BUBBLES
Online Access:	http://documents.worldbank.org/curated/undefined/950861633463735294/Decrypting-New-Age-International-Capital-Flows http://hdl.handle.net/10986/36345

id	okr-10986-36345
recordtype	oai_dc
spelling	okr-10986-363452021-10-13T05:10:43Z Decrypting New Age International Capital Flows Graf von Luckner, Clemens Reinhart, Carmen M. Rogoff, Kenneth CRYPTOCURRENCY BITCOIN INTERNATIONAL CAPITAL FLOWS FINANCIAL TRANSACTIONS SPECULATIVE BUBBLES This paper employs high frequency transactions data on the world’s oldest and most extensive centralized peer-to-peer Bitcoin market, which enables trade in the currencies of more than 135 countries. It presents an algorithm that allows, with high probability, the detection of “crypto vehicle transactions” in which crypto currency is used to move capital across borders or facilitate domestic transactions. In contrast to previous work which has used “on-chain” data, this paper’s approach enables one to investigate parts of the vastly larger pool of “off-chain” transactions. Finding that, as a conservative lower bound, over 7 percent of the 45 million trades on the exchange we explore represent crypto vehicle transactions in which Bitcoin is used to make payments in fiat currency. Roughly 20 percent of these represent international capital flight/flows/remittances. Although this work cannot be used to put a price on cryptocurrencies, it provides the first systematic quantitative evidence that the transactional use of cryptocurrencies constitutes a fundamental component of their value, at least under the current regulatory regime. 2021-10-12T17:36:32Z 2021-10-12T17:36:32Z 2021-10 Working Paper http://documents.worldbank.org/curated/undefined/950861633463735294/Decrypting-New-Age-International-Capital-Flows http://hdl.handle.net/10986/36345 English Policy Research Working Paper;No. 9794 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Latin America & Caribbean
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	CRYPTOCURRENCY BITCOIN INTERNATIONAL CAPITAL FLOWS FINANCIAL TRANSACTIONS SPECULATIVE BUBBLES
spellingShingle	CRYPTOCURRENCY BITCOIN INTERNATIONAL CAPITAL FLOWS FINANCIAL TRANSACTIONS SPECULATIVE BUBBLES Graf von Luckner, Clemens Reinhart, Carmen M. Rogoff, Kenneth Decrypting New Age International Capital Flows
geographic_facet	Latin America & Caribbean
relation	Policy Research Working Paper;No. 9794
description	This paper employs high frequency transactions data on the world’s oldest and most extensive centralized peer-to-peer Bitcoin market, which enables trade in the currencies of more than 135 countries. It presents an algorithm that allows, with high probability, the detection of “crypto vehicle transactions” in which crypto currency is used to move capital across borders or facilitate domestic transactions. In contrast to previous work which has used “on-chain” data, this paper’s approach enables one to investigate parts of the vastly larger pool of “off-chain” transactions. Finding that, as a conservative lower bound, over 7 percent of the 45 million trades on the exchange we explore represent crypto vehicle transactions in which Bitcoin is used to make payments in fiat currency. Roughly 20 percent of these represent international capital flight/flows/remittances. Although this work cannot be used to put a price on cryptocurrencies, it provides the first systematic quantitative evidence that the transactional use of cryptocurrencies constitutes a fundamental component of their value, at least under the current regulatory regime.
format	Working Paper
author	Graf von Luckner, Clemens Reinhart, Carmen M. Rogoff, Kenneth
author_facet	Graf von Luckner, Clemens Reinhart, Carmen M. Rogoff, Kenneth
author_sort	Graf von Luckner, Clemens
title	Decrypting New Age International Capital Flows
title_short	Decrypting New Age International Capital Flows
title_full	Decrypting New Age International Capital Flows
title_fullStr	Decrypting New Age International Capital Flows
title_full_unstemmed	Decrypting New Age International Capital Flows
title_sort	decrypting new age international capital flows
publisher	World Bank, Washington, DC
publishDate	2021
url	http://documents.worldbank.org/curated/undefined/950861633463735294/Decrypting-New-Age-International-Capital-Flows http://hdl.handle.net/10986/36345
_version_	1764485116413870080

Decrypting New Age International Capital Flows

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