Blockchains Industrialise Trust

5 Pages Posted: 21 Nov 2017

See all articles by Chris Berg

Chris Berg

Royal Melbourne Institute of Technolog (RMIT University)

Sinclair Davidson

RMIT University

Jason Potts

Royal Melbourne Institute of Technolog (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 or http://dx.doi.org/10.2139/ssrn.3074070

Chris Berg

Royal Melbourne Institute of Technolog (RMIT University) ( email )

124 La Trobe Street
Melbourne, 3000
Australia

Sinclair Davidson (Contact Author)

RMIT University ( email )

124 La Trobe Street
Melbourne, 3000
Australia

Jason Potts

Royal Melbourne Institute of Technolog (RMIT University) ( email )

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