The Bridging Model: Exploring the Roles of Trust and Enforcement in Banking, Bitcoin, and the Blockchain

42 Pages Posted: 14 Oct 2016 Last revised: 21 Jan 2017

Date Written: 2016

Abstract

Bitcoin has long been touted as a currency and a payment system that relies on cryptography and mathematics rather than trust. But is Bitcoin really trustless? And if so, would that be a good thing? This article under-takes a critical deconstruction of Bitcoin and the blockchain, their themes of democracy and transparency, and the idea that they are trustless. The article then proposes a new conceptualization of the role of trust in business and contracting: the bridging model, which allows for a more nuanced understanding of the interplay between enforcement and trust in contract formation. The bridging model is applied first to traditional banking, to illustrate and analyze the enforcement mechanisms underpinning the U.S. dollar as currency and the banking system as a whole, and to demonstrate that the enforcement mechanisms (government backing and regulation) are not as robust as generally believed. The bridging model is then applied to Bitcoin, to show not only that the system requires more trust than is generally understood, but also that both currency and payment systems benefit from the involvement of trusted intermediaries in response to problems and crises.

Keywords: bitcoin, blockchain, bridging model, trust, payment systems, currency

JEL Classification: K19

Suggested Citation

Christopher, Catherine Martin, The Bridging Model: Exploring the Roles of Trust and Enforcement in Banking, Bitcoin, and the Blockchain (2016). 17 Nevada L.J. 1 (2016). Available at SSRN: https://ssrn.com/abstract=2851492

Catherine Martin Christopher (Contact Author)

Texas Tech University School of Law ( email )

1802 Hartford
Lubbock, TX 79409
United States

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