The Blockchain Revolution: Decoding Digital Currencies David Andolfatto and Fernando M. Martin INTRODUCTION Few people took notice of an obscure white paper published in 2009 titled “Bitcoin: A Peer-to- Peer Electronic Cash System,” authored by a pseudonymous Satoshi Nakamoto. e lack of fanfare at the time is hardly surprising given that innovations in the way we make payments are not known to generate tremendous amounts of excitement, let alone inspire visions of a revolution in finance and corporate governance. But just over a decade later, the enthusiasm for cryptocurrencies and decentralized finance spawned by Bitcoin and blockchain technology has grown immensely and shows no signs of abating. Because cryptocurrencies are money and payments systems, they have naturally drawn the interest of central banks and regulators. e Federal Reserve Bank of St. Louis was the first central banking organization to sponsor a public lecture series on the topic: In March 2014, presenters outlined the big picture of cryptocurrencies and the blockchain by discussing its possibilities and pitfalls. 1 Since that time, the Bank’s economists and research associates have published numerous articles and explainers on these topics. 2 is article represents a continuation of this effort to help educate the public and offer our perspective on the phenomenon as central bankers and economists. 3 Cryptocurrencies and decentralized finance have grown considerably since the publication of the white paper on bitcoin in 2009. is article presents an overview of cryptocurrencies, blockchain technology, and their applications, explaining the spirit of the enterprise and how it compares with traditional operations. We discuss money, digital money, and payments; cryptocurrencies, blockchain, and the double-spending problem of digital money; decentralized finance; and central bank digital currency. (JEL E42, E44, E58, G21, G23, G28, G34) Federal Reserve Bank of St. Louis Review, ird Quarter 2022, 104(3), pp. 149-65. https://doi.org/10.20955/r.104.149-65 David Andolfatto is a senior vice president and economist and Fernando M. Martin is an assistant vice president and economist at the Federal Reserve Bank of St Louis. This article is derived from their essay published in the 2021 annual report of the Federal Reserve Bank of St Louis: https://www.stlouisfed.org/annual-report/2021/essay. © 2022, Federal Reserve Bank of St. Louis. The views expressed in this article are those of the author(s) and do not necessarily reflect the views of the Federal Reserve System, the Board of Governors, or the regional Federal Reserve Banks. Articles may be reprinted, reproduced, published, distributed, displayed, and transmitted in their entirety if copyright notice, author name(s), and full citation are included. Abstracts, synopses, and other derivative works may be made only with prior written permission of the Federal Reserve Bank of St. Louis. 149