Ever since 2008, Blockchain technology has enjoyed a phenomenal boom, in the wake of Bitcoin, the pioneer of crypto-currencies. Yet crypto-currencies continue to make headlines. For their proponents, they provide freedom from financial intermediaries, particularly banks, while guaranteeing the security and confidentiality of transactions. Critics argue that digital currencies are carbon-generating and akin to Ponzi schemes. Recent scandals in the industry confirm this, the most notable of which was the FTX platform’s bankruptcy in November 2022.

Despite this most divisive context, Blockchain technology offers undeniable advantages in terms of decentralization, security, and transparency. Moreover, it’s no coincidence that traditional financial players are interested in it, as well as the world’s major central banks and academic research.

At the Institut Louis Bachelier (ILB), this area of research is particularly closely observed and analyzed. An initial research initiative was in fact launched in November 2016 and was continued until the end of 2022. At the same time, other projects have emerged, such as Blockchain at the service of climate or a certification in decentralized finance (DeFi), in partnership with Université Paris-Dauphine – PSL. Furthermore, a major new project has been in the works in recent months, designed as a “DEFI Center” within the ILB, focused on digital and decentralized finance. The aim is to study the potential for the development of this “new type” of finance.

Meanwhile, as we await the launch of this future project at the end of 2023, this new issue of the Opinions & Debates collection is full of insights for understanding the role of cryptocurrencies and their high volatility, as well as their differences from traditional currencies issued by central banks. Bruno Biais, Professor of Finance at HEC Paris, outlines the classical theories of money and then extends them to crypto-currencies to identify their distinctive characteristics. A fascinating read, from start to finish.

Enjoy your reading!

Jean-Michel Beacco, Delegate General of the Institut Louis Bachelier