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Blockchains Industrialise Trust

5 Pages Posted: 21 Nov 2017  

Chris Berg

RMIT University - School of Economics, Finance and Marketing

Sinclair Davidson

RMIT University - School of Economics, Finance and Marketing

Jason Potts

RMIT University

Date Written: November 19, 2017

Abstract

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

Suggested Citation

Berg, Chris and Davidson, Sinclair and Potts, Jason, Blockchains Industrialise Trust (November 19, 2017). Available at SSRN: https://ssrn.com/abstract=3074070

Chris Berg

RMIT University - School of Economics, Finance and Marketing ( email )

Level 12, 239 Bourke Street
Melbourne, Victoria 3000
Australia

Sinclair Davidson (Contact Author)

RMIT University - School of Economics, Finance and Marketing ( email )

445 Swanston Street
Melbourne, Victoria 3000
Australia
+61-3-9925-5869 (Phone)
+61-3-9925-5986 (Fax)

Jason Potts

RMIT University ( email )

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