Bitcoin and Beyond
Annual Review of Financial Economics, Volume 14, Forthcoming
26 Pages Posted: 2 Nov 2021 Last revised: 31 Jan 2022
Date Written: November 1, 2021
We survey extant literature on the economics of blockchain fundamentals with particular focus on Bitcoin, Proof-of-Work and Proof-of-Stake. We formally clarify Bitcoin’s economic significance in solving the double-spending problem without a centralized entity. We then transition to the economics literature, highlighting the key endogenous economic interactions among participants in the Bitcoin ecosystem as well as the economics of Proof-of-Stake and other potential consensus algorithms. Along the way, we discuss various literature that provides important insights regarding fees, forks and price volatility. We conclude by reflecting on the next generation of blockchain innovations.
Keywords: blockchain, bitcoin, fees, proof-of-work, proof-of-stake
JEL Classification: G00, O30
Suggested Citation: Suggested Citation