Blockchains Industrialise Trust
5 Pages Posted: 21 Nov 2017
Date Written: November 19, 2017
Blockchains are 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.
Keywords: blockchain, transaction costs, industrialisation, platforms
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