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...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2021
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/undefined/950861633463735294/Decrypting-New-Age-International-Capital-Flows http://hdl.handle.net/10986/36345 |
| Summary: | 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. |
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