This is the first time I've ever seen the question asked.
From Tyler Cowen at Marginal Revolution:
That is a reader request from Jerry Kate:
Is crypto effectively adding to M2 or M3 money supply and hence inflationary (outside the control and models of central banks), or is the velocity of crypto so low that it acts (like stocks) as a store of value having no impact on inflation? Will the answer to the prior question change if the market cap of crypto doubles or if crypto is tweaked to add velocity, or incorporated into the banking system to generate multiplier effects? Should central banks be worried?
I think you could ask this question of monetary economists, and get “confirmed” answers, yet the answers would disagree with each other. My views are as follows:
1. If crypto prices are bubbles, they will encourage more spending and thus they would be inflationary, though only mildly so. And that process could not continue for very long. In the old school “Gurley and Shaw” sense, crypto is a kind of outside money and net wealth, and so spending will rise....
....MUCH MORE, and as always, some interesting comments.
