Proof of Work as it Relates to the Theory of the Firm

Abstract

One of the little-known aspects of bitcoin is the nature of the proof of work system. There are many people, especially those who support a UASF or PoW change that believe a distributed system should be completed as a mesh. In this, they confuse centralised systems with centrality. The truth of the matter, no matter which proof of work system is implemented, they all follow a maximal growth curve that reflects the nature of the firm is detailed in 1937 by Ronald Coase. In this paper, we address the issues of using alternate proof of work systems with regards to either incorporating alternate functions in an extension of simply securing the network against the use of proof of work systems in an attempt to create a one person one vote scenario in place of economic incentivisation.

Keywords: Bitcoin, Proof of Work, Firm Theory, Condorcet’s paradox

JEL Classification: Economics