---
title: "The Economics of Blockchain Shared Security"
author: "Allen, D.W.E.; Berg, C.; Davidson, S."
date: "2026-05-01"
url: "https://chrisberg.org/2026/05/the-economics-of-blockchain-shared-security/"
type: "Book chapters"
published_in: "in Cryptoeconomic Theory, World Scientific, pp. 35–51"
doi: "10.1142/9781800618664_0003"
topics: "Blockchain governance, Institutional economics and public choice"
---

# The Economics of Blockchain Shared Security

*With Darcy W.E. Allen and Sinclair Davidson. Published in Melanie Swan, Shin’ichiro Matsuo, Frank Witte and Yasushi Takagi (eds), [Cryptoeconomic Theory](https://doi.org/10.1142/9781800618664_0003), World Scientific, 2026, pp. 35–51.*

**Abstract:** Blockchain networks must decide whether to produce their own security or purchase it from other networks, presenting a classic make-or-buy decision in institutional economics. This chapter develops a framework for analysing shared-security arrangements using transaction-cost economics and early empirical evidence. It examines how asset specificity, uncertainty and opportunism shape governance structures in shared-security provision. Successful security sharing requires institutional mechanisms that manage adaptation while protecting relationship-specific investments. The chapter proposes governance solutions for mitigating contracting hazards in shared-security arrangements.

Available at [World Scientific](https://doi.org/10.1142/9781800618664_0003).