Signals and Incentives in Blockchain Applications

Ch. 8 of James Caton (ed.,) "The Economics of Blockchain and Cryptocurrency: A Transaction Costs Revolution." 2022, Edward Elgar Publishing.

21 Pages Posted: 28 Aug 2020 Last revised: 27 Oct 2022

Date Written: October 25, 2022

Abstract

Since Bitcoin’s invention in 2009, permissionless blockchain technology has gone through several waves of interest and development. While applications related to payments have advanced at breakneck speed, progress in financial and nonmonetary applications have largely failed to live up to initial excitement. This chapter considers the incentives facing network participants in light of the fundamental problem of signal verification. Doing so can account for both the successes and the failures: first, why are payments a particularly suitable problem to be solved by blockchain technology? And second, what additional problems do financial and nonmonetary applications pose?

Keywords: Cryptocurrency, Bitcoin, Blockchain, Game theory, Signaling, Information

JEL Classification: C72, E42, G23

Suggested Citation

Harwick, Cameron, Signals and Incentives in Blockchain Applications (October 25, 2022). Ch. 8 of James Caton (ed.,) "The Economics of Blockchain and Cryptocurrency: A Transaction Costs Revolution." 2022, Edward Elgar Publishing., Available at SSRN: https://ssrn.com/abstract=3657592 or http://dx.doi.org/10.2139/ssrn.3657592

Cameron Harwick (Contact Author)

SUNY College at Brockport ( email )

Brockport, NY 14420
United States

HOME PAGE: http://cameronharwick.com

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