A Dynamical Systems Approach to Cryptocurrency Stability

Understand

Recently, the notion of cryptocurrencies has come to the fore of public interest.

• These assets that exist only in electronic form, with no underlying value, offer the owners some protection from tracking or seizure by government or creditors.
• We model these assets from the perspective of asset flow equations developed by Caginalp and Balenovich, and investigate their stability under various parameters, as classical finance methodology is inapplicable.
• By utilizing the concept of liquidity price and analyzing stability of the resulting system of ordinary differential equations, we obtain conditions under which the system is linearly stable.