Hayekian hurdles: Challenges to cryptocurrency as a viable basis for a new monetary order

Freitas, Luís Pedro; Cerdeira, Jorge; Lourenço, Diogo Article Hayekian hurdles: Challenges to cryptocurrency as a viable basis for a new monetary order Economies Provided in Cooperation with: MDPI – Multidisciplinary Digital Publishing Institute, Basel Suggested Citation: Freitas, Luís Pedro; Cerdeira, Jorge; Lourenço, Diogo (2025) : Hayekian hurdles: Challenges to cryptocurrency as a viable basis for a new monetary order, Economies, ISSN 2227-7099, MDPI, Basel, Vol. 13, Iss. 1, pp. 1-17, https://doi.org/10.3390/economies13010012 This Version is available at: https://hdl.handle.net/10419/329292 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. 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(2025). Hayekian Hurdles: Challenges to Cryptocurrency as a Viable Basis for a New Monetary Order. Economies, 13(1), 12. https://doi.org/10.3390/ economies13010012 Copyright: © 2025 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https://creativecommons.org/ licenses/by/4.0/). Article Hayekian Hurdles: Challenges to Cryptocurrency as a Viable Basis for a New Monetary Order Luís Pedro Freitas 1, Jorge Cerdeira 2,3,* and Diogo Lourenço 3 1Faculty of Economics, University of Porto, Rua Dr. Roberto Frias s/n, 4200-464 Porto, Portugal 2IS-UP, Faculty of Arts and Humanities, University of Porto, Via Panorâmica s/n, 4150-564 Porto, Portugal 3CEF.UP, Faculty of Economics, University of Porto, Rua Dr. Roberto Frias s/n, 4200-464 Porto, Portugal *Correspondence: jcer[email protected] Abstract: The rise of cryptocurrencies over the past decade has promised to challenge the dominance of fiat money systems and reshape monetary policy. However, recent developments, including market volatility and the collapse of key exchanges like FTX, have eroded public trust, raising skepticism of a feasible transition to a crypto-based monetary system. This paper explores why cryptocurrencies have not met the expectations of their proponents, particularly those who saw them as a step towards Friedrich Hayek’s vision for competitive currency issuance. While cryptocurrencies reflect some aspects of Hayek’s model, their instability—especially in Bitcoin-like assets—undermines their role as a reliable alternative to fiat money. The paper also considers how central bank independence and regulatory gaps further hinder the development of a robust cryptocurrency framework. Despite the continued relevance of Hayek’s ideas in today’s monetary landscape, the entrenched structures of modern central banks and the rise of Central Bank Digital Currencies suggest that a decentralised currency order remains unlikely in the near future. Keywords: cryptocurrencies; Hayek; currency competition; currency adoption; monetary evolution 1. Introduction In recent years, the landscape of money creation and monetary policy appears to be undergoing one of the most significant changes since the widespread adoption of fiat money regimes. Cryptocurrencies have grown in importance both in the portfolios of individuals and in the minds of policy-makers, emerging as a challenge to extant institutions (Adrian & Mancini-Griffoli,2019). However, despite early optimism, recent developments—including sharp movements in market value and the collapse of major exchanges like FTX—have led to diminished public trust, affecting discussions around the role of digital currencies in the monetary system (The Economist,2023). This article positions the development of cryptocurrencies within the broader history of money, exploring why they have not met the expectations of their proponents, particularly those who saw them as a possible realisation of Friedrich Hayek’s vision for monetary competition in his influential 1976 Denationalisation of Money (Hayek,1990). In this work, Hayek questioned whether monetary policy should remain a governmental monopoly, proposing an alternative system where private banks also compete by issuing currencies. While many of his contemporaries deemed this vision utopian, his ideas have been brought to the fore when analysing the emergence of cryptocurrencies (Bas,2020). We find that, while these assets embody some aspects of Hayek’s vision—namely being a decentralised alternative to government-issued money—, their current form—particularly Bitcoin-like Economies 2025,13, 12 https://doi.org/10.3390/economies13010012 Economies 2025,13, 12 2 of 17 assets—suffers from a level of volatility that undermines their role as a stable alternative to fulfilling the traditional functions of money as a store of value, a medium of exchange, and a unit of account. Still, we find that alternatives like stablecoins are more promising. Furthermore, we also discuss the challenges posed by central bank independence and the regulatory milieu, which hinder the development of a robust cryptocurrency framework. As central banks continue to expand their discretionary roles, we find that Hayek’s ideas remain relevant, but the entrenched structures of modern monetary systems suggest that a decentralised currency order is unlikely in the near future. This article is structured as follows. First, we clarify our research questions and our methodological strategy. Second, we provide an overview of the historical and institutional context of state-issued money, highlighting the main institutional and technological changes that shape our modern understanding of it. We then delve into Hayek’s (1990) proposal for a competitive monetary issuance system and its links to cryptocurrencies. We then present arguments outlining why his proposal, in its cryptographic form, appears impractical. Finally, we conclude by synthesising the findings and discussing the broader implications of this research. 2. Research Questions and Methodological Strategy This article offers a theoretical reflection, grounded in the literature and supported by a selection of empirical observations, aiming to illuminate the contemporary relevance of F. A. Hayek’s proposal for a private, competitive currency issuance system. It specifically addresses the following main questions: 1. Do current cryptocurrency markets dovetail with Hayek’s original vision for competitive private currencies? 2. To what extent do existing cryptocurrencies meet—or promise to meet—Hayek’s criteria for stable, competitive currencies? 3. How have institutional developments since Hayek’s time—such as the development of central bank independence and ancillary regulatory frameworks—affected the relevance of his proposals? 4. Is a generally accepted, decentralised, competitive currency issuance system more feasible today than in Hayek’s day? To address these questions, our analytical foundation is Hayek’s Denationalisation of Money. This work articulates a conceptual framework relating currency adoption and competitiveness to attributes like purchasing power stability. This framework is extended and enriched by situating the rise of cryptocurrencies in the history of currencies and by engaging with recent theoretical and empirical literature, especially illuminating the real-world attributes of digital currencies, like their volatility, barriers to adoption, and the present regulatory landscape. The analysis applies this enriched framework to critically examine present-day digital currencies, including Bitcoin-like assets, stablecoins, or Central Bank Digital Currencies (CBDCs). While this study does not aim to develop a quantitative analysis, empirical observations are selectively included to buttress key points. For instance, we collect and analyse data on the volatility of various digital assets to underscore their limitations as stable stores of value. 3. From the Age of fiat Currencies to Cryptocurrencies Understanding how governments have managed money throughout history is crucial to grasping the context in which cryptocurrencies have emerged and Hayek’s argument. By extending this analysis beyond Hayek’s time, we shed light on relevant institutional reforms and technological advancements that have taken place since the 1970s. These Economies 2025,13, 12 3 of 17 developments have paved the way for the rise of cryptocurrencies, offering new possibilities and challenges for the future of monetary systems. 3.1. (State) Money Prior to the Collapse of the Bretton Woods Arrangements It is unclear exactly when money became “the dice of politicians” (Hayek,1999, p. 240), but there is broad consensus that the state’s role in monetary policy has been a defining feature of modern economies. There is no unanimous definition of money, despite its crucial role in any modern economy (Banco de Portugal,n.d.). Ali et al. (2014) define money as “something” (p. 264) that simultaneously serves as a medium of exchange with which payments are made, a store of value that allows purchasing power to be deferred into an unknown future date, and a unit of account against which the value of other items is measured. From at least the 13th century, European monetary authorities commonly declared coins made of precious metal—namely gold and silver—as legal tender, assigning them a specific unit of account value that was often different from their intrinsic value (Redish, 1993). By the early modern period, rulers had the power to define the unit of account and control the mint, enabling them to manipulate currency value via seigniorage. According to Redish (1993), this practice was frequent, particularly while alternative revenue sources, such as taxation, remained underdeveloped. During the 16th century—with the emergence of goldsmith banks (Ali et al.,2014)— paper notes began to replace precious metal coins as a medium of exchange (Redish, 1993). Initially, these notes were fully backed by metal coins and acted as receipts for gold deposits that banks were entrusted with. Although not intrinsically valuable, they could be redeemed for a fixed quantity of an underlying commodity, facilitating the transfer of large sums of money without the need to physically transport heavy metals (European Central Bank,2012). The development of fractionally backed paper money and private note-issuing banks eventually led to the establishment of central banks, typically private institutions with a monopoly over the issuance of notes granted legal tender status (Redish,1993). Fractional reserve banking, by reducing reserve ratios, made the banking system more efficient, but it also introduced systemic risks, prompting the emergence of central banks to stabilise the system (Redish,1993). Ali et al. (2014) argue that central banks arose because of the intrinsic link between money and payment systems: for money to function as a medium of exchange, a system that facilitates the transfer of value ( i.e. , a payment system) must be in place. Additionally, a means of recording stored values ( i.e. , a ledger) is required if transactions are to be cleared without physically exchanging currency. Carstens et al. (2022) further this insight, stating that when economic agents make payments, they are simultaneously trusting both the money and the payment system that executes the transaction. As the number of banks increased, the need for efficiency led to the creation of a clearing bank, holding the accounts of all participating institutions (Ali et al.,2014). Despite these advances, the monetary systems of Western economies retained some features of their earlier roots (Redish,1993). Metal coins remained in circulation, and the convertibility of paper money into commodities like gold remained a cornerstone of monetary systems until the 20th century. The gold standard, which linked money supply to gold reserves, underpinned much of the prosperity of the Atlantic economy (Redish, 1993). Over time, the link between the money supply and anchor commodities weakened, but it remained significant. By the early 20th century, managing gold reserves became increasingly difficult, culminating in the abandonment of the gold standard during World War I, followed by its brief reinstatement in the 1920s and final collapse in the wake of 1929. Economies 2025,13, 12 4 of 17 The post-World War II era saw the creation of a new international monetary order, the Bretton Woods system. Signed in 1944, the accord pegged national currencies to the United States dollar, itself convertible into gold at a fixed rate of $35 per ounce. However, this system did not last, with President Richard Nixon suspending the dollar’s convertibility into gold in August 1971. This marked the definitive end of the commodity-backed monetary era and the affirmation of the fiat money system that predominates today. 3.2. A Snapshot of the Age of Fiat Currencies Following the collapse of the Bretton Woods system, most developed nations favoured flexible exchange rates (Croce & Khan,2000). This, inter alia, offered the opportunity to implement discretionary monetary policies (Croce & Khan,2000). These policies allow governments to influence macroeconomic outcomes by controlling both fiscal and monetary policy instruments (Bandaogo,2021). However, these newfound possibilities brought their own challenges, such as the time-inconsistency problem of monetary policy, often identified as an important cause of The Great Inflation of the 1970s (Bandaogo,2021) which prompted Hayek to originally write and publish Denationalisation of Money.Jordan (2022) emphasises that this period provides a clear historical lesson: when central banks and fiscal authorities collaborate, monetary policy is used to—either directly or indirectly—finance deficits, leading to high inflation and concomitant consequences, like resource misallocation, as explained by Croce and Khan (2000) and Jordan (2022). In response to inflationary pressures, many countries began to grant their central banks institutional independence starting in the mid-1980s, tasking them with maintaining price stability (Croce & Khan,2000). Nevertheless, central banks must never overlook the effects of fiscal policy on their capacity to fulfil this mandate (Jordan,2022). Independent central banks operate under the principles of accountability and transparency (Mersch,2017). Accountability refers to the political duty to provide ex-post explanation and justification of autonomous decision-making and is essential to legitimise central bank activity in democratic societies. Transparency aims to enhance the effectiveness of central banks’ policies by clearly communicating their objectives, behaviours, and decisions to the public. In recent years, however, central bank independence has come under increasing scrutiny. Following the 2008 financial crisis, central banks were compelled to engage in significant discretionary and unconventional interventions with substantial distributional and fiscal implications (Palley,2019). Moreover, in the aftermath of this crisis, central banks’ powers, tasks, and responsibilities expanded beyond those traditionally associated with monetary policy (Bandaogo,2021;Mersch,2017). As Bandaogo (2021) notes, accountability has become more challenging because, unlike price stability—easily assessed by comparing target and recorded inflation levels —, new responsibilities, such as financial stability or environmental sustainability and gender diversity, as highlighted by Romelli (2024), are much more abstract. The COVID-19 pandemic further intensified debates around central bank independence (Bandaogo,2021). Prior to this event, central banks had substantially decreased shortand long-term interest rates—sometimes into negative territory—by buying government and corporate bonds, thereby increasing both their balance sheets and risk exposure (Jordan,2022). Following the coronavirus outbreak, measures to contain the spread of the disease were implemented. These measures severely restricted business activities, inducing both fiscal and monetary responses. Social benefit schemes and stimulus packages were introduced to stabilise the economy, albeit at the cost of a substantial increase in alreadyhigh public debt. Meanwhile, central banks also sought to maintain market liquidity and avoid deflation. Economies 2025,13, 12 5 of 17 It is now critical for central banks to demonstrate that their extraordinary measures during these crises were temporary and do not signal the beginning of long-term fiscal dominance over monetary policy (Jordan,2022). In this context, Romelli (2024) analyses the evolution of central bank independence across a sample of 155 countries between 1923 and 2023. The author identifies a trend towards enhanced central bank independence, with reforms slowing after 2008 but resuming since 2016. 3.3. Money and Payment Systems in the Digital Era Modern payment systems share fundamental similarities with those used by 16thcentury goldsmiths, in that payments are still cleared by reducing the payer’s balance and increasing that of the recipient’s account by an equivalent amount (Ali et al.,2014). It is the technologies used to record and transfer balances between banks that are entirely different, particularly with the advent of computerisation. Technological advancements since the mid-20th century have had a profound impact on payment systems in two key ways (Ali et al.,2014). First, records and ledgers have transitioned from paper to electronic formats, increasing the speed of completing transactions and reducing operational risks. Second, the development of low-cost digital technologies spurred the creation of new payment schemes, making payments more accessible for users. Mobile money schemes—where money is stored as a credit on a smart card or a ledger while relying on national currencies—are just an example of these innovations (Ali et al.,2014). These schemes have been especially transformative in regions with limited traditional banking infrastructure, providing access to financial services for underserved populations. Even in developed economies, mobile money has gained traction as an alternative to traditional banking, driven by its convenience and lower costs (Ali et al.,2014). The COVID-19 pandemic accelerated the adoption of digital and contactless payment methods as fear of physical contact and a surge in e-commerce reshaped consumer behaviour (Committee on Payment and Market Infrastructures,2021). A 2020 study by Mastercard (2020) revealed that 79% of worldwide respondents had adopted contactless payments, with concerns over safety and cleanliness cited as key drivers. Similarly, by 2021, 64% of adults worldwide had already engaged in at least one digital payment transaction (Demirgüç-Kunt et al.,2022). 3.4. The Age of New Currency Schemes and the Crypto Ecosystem The technological advancements of the late 20th and early 21st centuries have not only revolutionised payment systems but have also facilitated the emergence of alternative currencies and decentralised structures (Ali et al.,2014). Cryptocurrencies, as an offspring of the digital revolution, are a notable innovation in this regard (Bas,2020). Bitcoin, proposed in 2008 by the pseudonymous Nakamoto (2008), propelled the development of blockchain technology (Alston et al.,2022) and enabled peer-to-peer transactions without the need for a trusted intermediary. In recent years, the scope of the cryptocurrency market has expanded significantly, leading to a conceptual shift from the narrow notion of ‘cryptocurrencies’ to the more inclusive term of ‘crypto assets’ (Houben & Snyers,2020). This reflects the complexity of the crypto ecosystem, which now encompasses a wide variety of assets with different functions. Achieving a precise consensus on terminology has proven difficult due to the diverse nature of these assets (Bas,2020). Still, Bas (2020) offers a classification of crypto assets into four primary categories: • Bitcoin and Altcoins (i.e., Bitcoin-like cryptocurrencies): These are decentralised cryptocurrencies whose supply is regulated by algorithms that dictate the growth rate Economies 2025,13, 12 6 of 17 of the currency. New units are typically generated through mining, a decentralised process where participants contribute computational power to validate transactions; • Stablecoins: These cryptocurrencies aim to address the volatility seen in Bitcoin and altcoins by stabilising purchasing power. They can be subdivided into the following: Collateralised Stablecoins: Backed by reserves, these coins maintain a 1:1 parity with a reference asset, such as a national currency. Their value depends on the quality of the collateral and the credibility of the issuer; Non-Collateralised Stablecoins: These rely on algorithms that adjust supply to ensure their market price stays in line with the value of the reference asset, without underlying physical reserves; • Tokens: These crypto assets are designed for specific functions and operate only within the platform for which they were created, as opposed to general-purpose currencies; • Central Bank Digital Currencies (CBDCs): These are digital versions of fiat currencies, issued by central banks and representing a digital extension of traditional currency systems. The evolution of cryptocurrencies and crypto assets is noteworthy, but it has also faced significant challenges. As shall be argued more comprehensively in subsequent sections, while Bitcoin-like cryptocurrencies were initially seen as potential alternatives to fiat money, their extreme volatility has limited their practical use as a reliable store of value or medium of exchange. Stablecoins have emerged as a possible solution to this issue, though they raise new concerns related to regulation and trust in their issuers. The path forward for crypto assets will depend on resolving issues related to, among others, scalability, regulation, and public trust. As argued next, F. A. Hayek’s prescient vision for competitive private currencies offers insights on these issues. 4. The Case for a New (Monetary) World Order Hayek’s (1990) proposal advocates for private currency issuance and competition. This system aims to reduce government intervention and politicisation of monetary policy. Cryptocurrencies have been linked to the Austrian economist’s vision, offering an alternative to traditional fiat currencies. However, critics argue that his proposal overlooks network effects and information costs. The relationship between Hayek’s ideas and cryptocurrencies is explored in the context of monetary theory and institutional developments. 4.1. Hayek’s Proposal Friedrich A. Hayek, a Nobel Laureate in Economics, first published Denationalisation of Money in 1976, in the aftermath of the collapse of the Bretton Woods system and amidst a period of stagflation (Bas,2020). Like other economists in the Austrian tradition, Hayek believed that if the management of money is in the hands of the government, the gold standard is the only satisfactory system (European Central Bank,2012). Yet, in this work, he questions the generally yet tacitly accepted belief that a given nation must be provided by its government with its own distinct currency. Hayek (1990) advocates for the removal of government monopolies over currency issuance, suggesting that private banks should be allowed to compete by issuing their own currencies. He believed that competition among private issuers would lead to greater monetary stability, as competitive forces would drive banks to maintain the value of their currencies, as public trust would be essential for their success. In his view, the public would choose the most stable and reliable currency, leading weaker currencies to be competed out of use. Hayek argues that such a system would not only reduce the risk of governmentinduced inflation but also promote individual freedom by diminishing government control over monetary policy. Economies 2025,13, 12 7 of 17 Hayek’s vision hinges on a self-regulating monetary system driven by competition rather than government intervention. The competition between private currencies would lead to innovations in financial management, more responsive monetary policies, and a currency system that reflects the real needs of the population. 4.2. Link to Cryptocurrencies In many ways, cryptocurrencies align with Hayek’s (1990) vision: they are not issued or controlled by centralised authorities, nor do they rely on official legal tender status for their acceptance (Fantacci,2019). Bas (2020) highlights two further noteworthy parallels between Hayek’s work and the nature of cryptocurrencies. Firstly, the design of most cryptocurrencies incorporates monetary rules that operate independently of political or arbitrary influences, thus avoiding discretionary policies common in fiat systems. This mirrors Hayek’s desire for a currency system governed by transparent and predictable rules rather than by government interference, which he believed to risk inflation and economic instability. Secondly, both Hayek’s theoretical framework and cryptocurrencies shift the focus away from the credibility of a central issuer, which is essential in fiat systems, to alternative mechanisms of trust and value. Further connections between Hayek’s (1990) proposal and cryptocurrencies can be seen in the way the latter can bypass state control over payment systems and capital movements (Fantacci,2019). Still, Hayek’s vision and the current ecology of crypto assets are far from perfectly aligned. As Mayer and Bofinger (2024) highlight, in Hayek’s (1990) vision issuers would regulate issuance relative to a reference asset, akin to how central or commercial banks manage foreign exchange reserves. This is most closely reflected in the operation of stablecoins, which, as mentioned, maintain a stable value by pegging their issuance to a reserve asset like fiat money, even if being pegged to such an asset might be, of itself, an important deviation from Hayek’s (1990) fundamental vision (Mayer & Bofinger,2024). 1 In contrast, unpegged Bitcoin-like currencies are not tied to any underlying asset or reference value at all, making their value, in practice, much more highly volatile. This volatility has been the rule rather than the exception, as demonstrated in Figure 1and Table 1 2 . As Alonso et al. (2024) show, the behaviour of Bitcoin resembles major historical asset bubbles, particularly the Tulip Mania (1634–1637) and, to a lesser extent, the Mississippi Company Bubble (1719–1720). Their failure to gain widespread acceptance as currencies could perhaps be seen as evidence of Hayek’s (1990) premise that purchasing power stability is crucial for the public acceptance of private currencies. In any case, some scholars see Bitcoin and similar cryptocurrencies as better aligned with Milton Friedman’s vision of a fixed supply of currency distributed without concern for market fluctuations 3 , rather than with Hayek’s competitive private currency system (Ametrano,2016;Bas,2020). Table 1. Descriptive statistics of daily returns. SP500 Gold Euro Yen Bitcoin Tether Mean Return 0.052 0.032 −0.005 0.016 0.205 0.000 Volatility 1.142 1.034 0.559 0.592 3.661 0.395 Min −11.984 −9.354 −2.775 −3.725 −37.170 −5.121 Max 9.383 7.832 3.459 3.820 25.247 5.824 Median 0.070 0.040 0.000 0.023 0.136 −0.001 Skewness −0.383 −0.310 0.013 0.011 −0.130 1.169 Kurtosis 13.635 8.531 5.235 6.592 10.532 63.823 Economies 2025,13, 12 8 of 17 (a) Euro (b) Japanese Yen (c) Bitcoin (d) Tether-USD (e) S&P500 (f) Gold Figure 1. Daily returns (%) of assets. Mayer and Bofinger (2024) suggest that a distinction must be made between Hayekian banknotes—which are physical and exchanged peer-to-peer—and bank accounts—which are digital and transferred via a centralised accounting system. In terms of convertibility requirements, Hayek’s (1990) stance is somewhat unclear. If he envisioned convertibility into national currencies or other underlying assets, then bank accounts under his system would resemble traditional bank accounts, and their digital equivalent could be embodied through stablecoins. If, however, Hayek did not intend to require legal convertibility, then unpegged cryptocurrencies, aside from their accounting mechanism, could also be classified as Hayekian money. Stablecoins replace trust in a monopolistic issuer with a competitive process that promotes mutual oversight among different issuers, whether public or private. Stablecoins incorporate the most appealing features of Bitcoin and altcoins—such as anonymous, fast, and low-cost transfers—while mitigating their inherent volatility (Bas,2020). It is worth highlighting that Figure 1, panel (d), illustrates the stabilisation process described by Hayek. Tether’s value—measured in US dollars—has, after an initial period of evident volatility, become relatively stable in recent years. This is confirmed by the data displayed in Table 1, where Tether emerges as the least volatile of the assets considered. This is further advanced in Figure 2and Table 2, where we zoom in on one of the Bitcoin bubbles identified by Alonso et al. (2024)—2021, the only year where we have information for the whole year for all six assets considered in our original dataset. Once again, Tether emerges as the least volatile of the assets considered, highlighting its relative advantage as a store of purchasing power. By being pegged to the United States dollar, Tether supports Bas’s (2022) argument that adopting a state fiat currency was a good business decision until mid-2021, as it benefited from the significant network effects provided by these currencies. It would likely continue to be advantageous if the inflationary pressures that emerged afterwards remain controlled. Bas (2020,2022) stresses the differences between collateralised and non-collateralised stablecoins, concluding that while the former closely mirror Hayek’s Economies 2025,13, 12 15 of 17 that impact mostly labour, as noted by Palley (2019). Yet, mainstream research often overlooks these distributional effects. This implicit bias may explain why there is little academic urgency to establish a comprehensive legal framework for the crypto sector. Instead, the absence of regulation seems to align with a cautious delay, effectively buying time for CBDCs to advance as the preferred model for future digital finance. This delay may reflect an underlying tension between the preservation of state control over monetary policy and the emergent demand for decentralised financial systems, revitalising some of the claims within Denationalisation of Money. Ultimately, whether Hayek’s vision can materialise remains uncertain. Given the prevailing structures and the inertia of established monetary systems, a transition to a competitive, cryptocurrency-based monetary order seems improbable in the near term. Future research might explore the theoretical question of whether dismantling government monetary monopolies, namely via cryptocurrency adoption, could itself become a distortion of historic financial norms, highlighting the inherent challenges in disrupting long-standing systems. Author Contributions: Conceptualisation, L.P.F., J.C. and D.L.; methodology, L.P.F., J.C. and D.L.; validation, L.P.F., J.C. and D.L.; formal analysis, L.P.F.; investigation, L.P.F.; writing—original draft preparation, L.P.F.; writing—review and editing, L.P.F., J.C. and D.L. All authors have read and agreed to the published version of the manuscript. Funding: This research was financed by Portuguese public funds through FCT (Fundação para a Ciência e a Tecnologia, I.P.), in the framework of project UIDB/04105/2020 and the project UID/00727. The project UID/00727 supported the article processing charges (APC). Informed Consent Statement: Not applicable. Data Availability Statement: All the data used in this article was obtained from Yahoo Finance on 8 December 2024. Conflicts of Interest: The authors declare no conflicts of interest. Notes 1 Bas (2020,2022), on the other hand, claims that this corresponds to merely a transitional phase. For this author, collateralised stablecoins may be considered Hayekian money when viewed from the perspective of supplier behaviour. 2 These elements were generated in RStudio using commands to retrieve data from Yahoo Finance for the Euro and Japanese Yen, as representatives of state fiat currencies, gold and the S&P500 index, as conventional financial assets, Tether, as the representative of stablecoins, and Bitcoin. The selection of these assets as references for the latter two was inspired by the works of Aharon and Demir (2022), Yousaf and Yarovaya (2022), and Yousaf et al. (2022). Data were retrieved, when available, from 3 January 2009, since this was the date that the first 50 Bitcoins were mined (Wallace,2011), until 30 June 2024, marking the end of the last complete semester. The measure of volatility used is daily percentage returns, capturing the day-to-day fluctuations in an asset’s closing price relative to the previous day’s value. 3In fact, Bitcoin’s rigid supply rule has been found to be the cause of its volatile and explosive price behaviour by Podhorsky (2024). 4 The author relies on the work of Friedman (1984), who suggests that individuals would only seek alternative currencies when they suffered from severe inflation, as happened in Mexico in the 1980s. Although Mexican people benefited from the freedom to use foreign currencies, partial dollarisation only occurred in the face of heavy inflation. We could also mention that the mass adoption of a non-national currency only occurs in abnormal circumstances, such as those occurring in Zimbabwe since the mid-2000s and Venezuela since late 2018, as reported by Castañeda et al. (2024). Still, in Peru, the national currency is only used for smaller local transactions and paying taxes, as residents are free to use either Nuevo Peruvian Soles or United States dollars. 5Panetta (2023) argues that blockchain transactions are inefficient, slow, and costly, referring to the ‘blockchain trilemma,’ where optimal security, scalability, and decentralisation cannot all be achieved simultaneously. 6 It should be noted, as Alonso et al. (2024) argue, that traditional measures designed to prevent speculative bubbles are unlikely to be effective in the case of Bitcoin, due to its digital and decentralised nature. Consequently, as these authors argue, modern regulatory approaches will likely need to adopt innovative and forward-thinking strategies. We speculate, however, that such measures may also expand regulatory bodies’ discretionary powers and concomitant risks. 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