Coexistence of several currencies in presence of increasing returns to adoption
arXiv:1801.04218 · doi:10.1016/j.physa.2017.12.117
Abstract
We present a simplistic model of the competition between different currencies. Each individual is free to choose the currency that minimizes his transaction costs, which arise whenever his exchanging relations have chosen a different currency. We show that competition between currencies does not necessarily converge to the emergence of a single currency. For large systems, we prove that two distinct communities using different currencies in the initial state will remain forever in this fractionalized state.