A Comprehensive Contracting Solution Using Blockchains

Abstract

Purpose: This paper develops the idea of comprehensive contractual solutions using the blockchain as a foundation. A comprehensive contractual solution is a template for engaging in all manner of complex contractual relationships while remaining tethered to the same underlying technology.

Approach: This paper introduces the idea of a platform contract as a practical method for contending with a range of incomplete contracts and mechanisms over a centralized platform network. It suggests why a platform contract, as a product of the network economy, represents essential inefficiencies; the paper addresses how these inefficiencies can be ameliorated by disintermediating platform networks using blockchains to develop comprehensive contractual solutions. Given the more limited nature of smart contracts, achieving this ideal on a blockchain has been a hard problem; the paper discusses proposed solutions that bode well for realizing this ambition.

Value: This paper suggests a very significant opportunity represented by blockchains that is generally underemphasized: A comprehensive contractual solution provided over a secure blockchain application that has broad acceptance, such as Bitcoin, has the very real potential to enable consistent and reliable contractual transactions to occur globally. The paper, therefore, also discuss how governments can assume a valuable role in encouraging these solutions by developing smart institutional intermediaries.

Keywords: Comprehensive Contractual Solutions, Blockchains, Platform Contracts, Disintermediation, Smart Institutional Intermediation

JEL Classification: D2, D7, L1, O3