Blockchain Basics : Economic Impact

Economically relevant areas of research into blockchain There are two areas of interest: Mechanisms for generating and maintaining 'decentralized consensus'. This is a description of the state of the world that is universally accepted and acted upon by all agents. Signalling the process of consensus generation may emphasize the trade offs in decentralization and incentive provision (for example, Kroll et al. 2013, Sahel 2018, and Bias et al. 2018), or study market organizations, typically drawing evidence from the Bitcoin blockchain. The real-world implications of the functionality blockchain provides. These include impacts on market transparency (Malinova and Park 2017), cryptocurrency valuation (Cong et al. 2018a), initial coin offerings (Li and Mann 2018, Cong and Li 2018), auditing (Cao et al. 2018), and smart contracts (Bartoletti and Pompianu 2017). Emphasizing the role of information, we have contributed to both areas of interest by offering a holistic analysis on the trade offs in providing blockchains core functionality (Cong and He 2018). We argue that the technology’s various incarnations share a core functionality in providing decentralized consensus, but there is a fundamental tension between decentralized consensus and information distribution in blockchain applications.