The Merger of Cryptography and Finance - Do Cryptographic Economic Systems Lead to the Future of Money and Payments?
25 Pages Posted: 18 Jan 2015
Date Written: December 11, 2014
What is accepted as payment has changed over time, and so have the ways in which payments are made. Bitcoin, a cryptographic computer protocol, represents for some just another currency to release and receive payments. For others to speculate or to diversify into an alternative asset class. In the following we will highlight why the Bitcoin protocol illustrates the first prototype of a cryptographic economic system, which is organized both autonomously and distributively - without any point of central control or single point of failure. The protocol pilots the first merger of cryptography and finance, where organizational operations adhere to the intractable institutions (rules) set by the protocol. More precise it showcased the worldwide first economic system on autopilot, which might not only change ’the Nature of the Firm’ as most famously discussed by Ronald Coase in 1937, but also the nature of economic development on basis of a more and more computerized economy, operating with significantly less transaction costs.
Keywords: economic system, money, cashless payments, self-enforcing institutions, Distributed Autonomous Organizations, Bitcoin, cryptography
JEL Classification: E40, O34, P10, L86, L22, G20
Suggested Citation: Suggested Citation