Incentives in Blockchain Design and Applications

19 Pages Posted: 28 Aug 2020

Date Written: July 21, 2020

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, Incentives in Blockchain Design and Applications (July 21, 2020). 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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