Where do Blockchains Fit in the History of Financial Institutions?

22 Pages Posted: 7 May 2020

Date Written: April 20, 2020


In this essay I present an interpretation of economic history through the prism of financial institutions, and analyze the blockchain technology in this context. The role of institutions has gone from defining and enforcing property rights to the more active role of preventing externalities and driving the whole economy out of crises. With two exemples (the Central Clearing Platform regulation and central bank communication) I show that such an active role can introduce inefficiencies related to the cost of trust. I propose an interpretation of blockchains as "autonomous institutions" and show how they can alleviate this cost of trust. In terms of the Coase theorem, their use reduces the cost of transacting thereby making institutions less relevant. If blockchains ever reach broad use, traditional institutions will likely have to adapt. I conclude that we could be on the verge of an important change in the institutional landscape.

Keywords: Economic History, Financial Institutions, Blockchains, Coase Theorem, Transaction Costs

JEL Classification: B52, H11, K11, O33, P14

Suggested Citation

Bertucci, Louis, Where do Blockchains Fit in the History of Financial Institutions? (April 20, 2020). Available at SSRN: https://ssrn.com/abstract=3580957 or http://dx.doi.org/10.2139/ssrn.3580957

Louis Bertucci (Contact Author)

Institut Louis Bachelier ( email )

Palais Brongniart
28 Place de la Bourse
Paris, 75002

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