Kose John, Global Virtual Seminar Series on Fintech
Date Aired: May 15, 2020
Charles William Gerstenberg Professor of Banking and Finance
Stern School of Business, New York University
Kose John is the Charles William Gerstenberg Professor of Banking and Finance at the Stern School of Business, New York University. Kose is also the President of the Financial Management Association International. His research interests include banking, capital markets theory, corporate finance, and economics of information.
Bitcoin remains sparsely adopted even a decade after its birth. We demonstrate theoretically that this limited adoption arises as an equilibrium outcome rather than as a transient feature. Our results arise primarily because Bitcoin’s design precludes expanding supply as a response to heightened demand. We demonstrate that expanding supply prolongs Bitcoin’s consensus process, thereby generating a dilemma. Either supply does not keep pace with demand so that prohibitive delays arise for traditional reasons, or supply keeps pace with demand and prohibitive delays arise due to the prolonged consensus process. In either case, prohibitive delays generate limited adoption as an equilibrium outcome.