Proof of work as a three sided market

Abstract: Blockchain technology is the distributed, decentralised ledger technology underlying Bitcoin and other cryptocurrencies. We apply Oliver Williamson’s transactions cost analysis to the blockchain consensus mechanism. Blockchains reduce the costs of opportunism but are not ‘trustless’. We show that blockchains are trust machines. Blockchains are platforms for three-sided bargaining that convert energy-intensive computation into economically-valuable trust.

Author(s): Chris Berg, Sinclair Davidson, Jason Potts

Journal: Frontiers in Blockchain

Vol: 3 Year: 2020 Article: 2

DOI: 10.3389/fbloc.2020.00002

Cite: Berg, Chris, Sinclair Davidson, and Jason Potts. “Proof of Work as a Three-Sided Market.” Frontiers in Blockchain, vol. 3, 2020, article 2.

Continue reading “Proof of work as a three sided market”

Blockchain technology as economic infrastructure: Revisiting the electronic markets hypothesis

Abstract: In the late 1980s and early 1990s the electronic markets hypothesis offered a prediction about effect of information technology on industrial organisation, and many business writers forecast significant changes to the shape and nature of the firm. However, these changes did not come to pass. This paper provides an economic analysis of why, using the transaction cost economic framework of Ronald Coase and Oliver Williamson. Non-hierarchical corporate organisation struggled against contracting problems in the presence of possible opportunistic behaviour. Technologies of trust offer an institutional mechanism that acts on the margin of trust, suppressing opportunism. The paper concludes that blockchain technology provides an economic infrastructure for the coordination of economic activity and the possible realisation of the electronic markets hypothesis.

Author(s): Chris Berg, Sinclair Davidson, Jason Potts

Journal: Frontiers in Blockchain

Vol: 2 Year: 2019 Article: 22

DOI: 10.3389/fbloc.2019.00022

Cite: Berg, Chris, Sinclair Davidson, and Jason Potts. “Blockchain Technology as Economic Infrastructure: Revisiting the Electronic Markets Hypothesis.” Frontiers in Blockchain, vol. 2, 2019, article 22.

Continue reading “Blockchain technology as economic infrastructure: Revisiting the electronic markets hypothesis”