Identity technologies: A transaction cost approach

With Sinclair Davidson and Jason Potts

Abstract: Identity is an input into economic exchange and contracting. The modern industrial economy has relies on cheap political identity to create trust and lower transaction costs. Market economies, however, have different identity needs than an administrative state. Economic efficiency in a digital economy requires high-quality economic identity to facilitate co-production of value on platforms, and to enable market competition through product-quality discrimination. Blockchain technologies and related advances are bringing innovation to economic identity technology. In this paper we explore state-produced identity and market-produced identity, the dynamics that exist in their demand and supply, how these categories are being shaped by technological change, the implications for privacy and secrecy, and the role of the state in market-produced identity.

Available at SSRN.

Blockchain and Investment: An Austrian Approach

Abstract: Investment is a function of expected profit, which involves calculation of the cost of trust. Blockchain technology is a new institutional technology (Davidson et al 2018) that industrialises trust (Berg et al 2018). We therefore expect that the adoption of blockchain technology into the economy will affect investment and capital structure. Using a broad Austrian economic approach, we examine how blockchain technology will affect the cost of trust, patterns of investment, and economic institutions.

Working paper available at SSRN.

Author(s): Darcy W. E. Allen, Chris Berg, Sinclair Davidson, Jason Potts

Journal: The Review of Austrian Economics

Vol: 34 Year: 2021 Pages: 149–162

DOI: 10.1007/s11138-020-00504-x

Cite: Allen, Darcy W. E., Chris Berg, Sinclair Davidson, and Jason Potts. “Blockchain and Investment: An Austrian Approach.” The Review of Austrian Economics, vol. 34, 2021, pp. 149–162.

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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.

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