Designing a global digital currency

Abstract

The notion of a global currency is a debate set aside in the past decade as the abstraction saw little potential for realization in a world with heterogeneous governments unwilling to sacrifice seigniorage for optimal design. The technical capability of creating digital currencies, independent of governments, resurrects the discussion and begs the questions of practical design and implementation. We discuss the characteristics of an ideal global currency and consider empirically the factors a cryptocurrency might use to create a portfolio mimicking the ideal design. Valuation Insight: Transactions costs are a key obstacle in preventing value-enhancing transactions. This paper explores the potential for a crypto currency to be adopted as a global currency with minimal transaction costs and no inflation risk. Such a currency could be created even in the absence of global political but would reduce the cost of international trade, increasing valuation of corporations globally.