Blockchain Economics: Implications Of Distributed Ledgers - Markets, Communications Networks, And Algorithmic Reality

✍ Scribed by Jason Potts, Soichiro Takagi, Melanie Swan, Paolo Tasca, Frank Witte

• Year: 2019
• Tongue: English
• Leaves: 318
• Category: Library

✦ Table of Contents

Contents
About the Editors
About the Contributors
Introduction
1.1 Introduction
1.1.1 Public and private blockchains
1.1.2 Blockchain economic literature
1.2 Blockchain Economics: Analysis Methods and Themes
1.2.1 Quantum computing
1.3 Chapter Overview
1.4 Chapter Summaries
1.4.1 Economic theory and market structure
1.4.2 Blockchain economic open network innovation
1.4.3 Social science and behavioral economics
1.4.4 Financial theory and complexity science
1.4.5 Policy, regulation, and incentives
1.4.6 Income inequality and economic inclusion
1.5 Limitations
1.6 Conclusion
References
Part 1 Economic Theory and Market Structure
Chapter 1. Blockchain Economic Theory: Digital Asset Contracting Reduces Debt and Risk
1.1 Introduction
1.2 Blockchain Economic Theory: Digital Asset Contracting
1.3 Blockchain-Registered Digital Assets (1)
1.4 New Modes of Contracting: Smart Contracts (2a)
1.5 New Forms of Money: Cryptotokens (2b)
1.6 New Structures of Financial Interaction (3)
1.6.1 Debt: Net Engagement of Capital (3a)
1.6.1.1 Payment Channels (3a1)
1.6.1.2 Securities as a Service (3a2)
1.6.2 Risk Management (3b)
1.6.2.1 Real-time Balance Sheets (3b1)
1.6.2.2 Black Swan Smart Contracts (3b2)
1.6.3 Financing and Participation (3c)
1.6.3.1 Initial Coin Offerings (ICOs) (3c1)
1.6.3.2 Open Platform Business Models (3c2)
1.6.4 Enterprise Blockchains (3d)
1.7 Risks, Limitations, and Future Outlook
1.8 Conclusion
References
Chapter 2. Does Blockchain “Decentralize” Everything?: An Insight from Organizational Economics
1.1 Envisioned decentralized organizations
1.2 Framework to assess the decentralization of organizations
1.2.1 The definition of an organization
1.2.2 Transaction cost economics
1.2.3 Workers’ incentives
1.3 Case study: Bitcoin’s organizational institution
1.3.1 Competitive mining for ledger integrity
1.3.2 The Bitcoin developers community
1.3.3 Miners’ voting for decision-making
1.4 Framework-based analysis
1.4.1 Uncertainty
1.4.2 Opportunism
1.4.3 Income risk aversion
1.4.4 Efficient decision-making
1.5 Conclusion
References
Chapter 3. The Blockchain Antidote to Monopolization
1.1 Introduction
1.2 The challenge and challenges of blockchain
1.2.1 The value of blockchain
1.2.1.1 Open source innovation
1.2.1.2 Decentralized trust
1.2.1.3 Tokenization
1.2.2 The long road to digital champion
1.2.2.1 Network effects
1.2.2.2 Going mainstream
1.3 Regulation in a decentralized economy
1.3.1 What constitutes a monopoly?
1.3.2 Applying competition law in a blockchain world
1.3.2.1 On whom and how would legislation apply
1.3.2.2 Complex competition dynamics
1.3.2.3 Private blockchains and collusion
1.4 Conclusions
References
Part 2 Blockchain Economic Open Network Innovation
Chapter 4. Financing Small & Medium Enterprises with Blockchain: An Exploratory Research of Stakeholders' Attitudes
1.1 Introduction
1.2 Use cases
1.2.1 Invoice financing (or factoring)
1.2.2 Inventory finance
1.3 Research objectives and methodology
1.3.1 Assumptions
1.3.2 Research method
1.3.3 Research protocol
1.3.4 Data analysis
1.4 Findings
1.4.1 Risks (that blockchain-based finance can potentially overcome)
1.4.1.1 Fraud
1.4.1.2 Administrative costs
1.4.2 Process
1.4.2.1 Valuation is key
1.4.2.2 The inventory finance process may be very enduring for SMEs
1.4.2.3 Invoice finance may be easier for blockchain
1.4.3 History
1.4.3.1 Full financial overview
1.4.3.2 Data privacy is key
1.4.4 How do stakeholders view the effect of blockchain-based financing on their profession?
1.4.4.1 Financiers
1.4.4.2 Accountants
1.4.4.3 SMEs
1.5 Discussion and conclusions
References
Chapter 5. Blockchains for Accelerating Open Innovation Systems for Sustainability Transitions
1.1 Introduction
1.2 Open Innovation Networks for Sustainability
1.3 Blockchain Technologies
1.4 Blockchain Powered Open Innovation Platforms for Sustainability Transitions
1.5 Conclusion
References
Part 3 Social Science and Behavioral Economics
Chapter 6. Blockchain and the Future of Work: A Self-Determination Theory Approach
1.1 Introduction
1.2 Work and Self-Determination Theory
1.3 Method
1.4 Results
1.4.1 Positive and negative effects of Blockchain
1.4.2 Quantitative and qualitative changes of the working world
1.4.3 Self-Determination Theory: Blockchain and psychological needs
1.5 Conclusion and Implications
References
Chapter 7. How Value is Created in Tokenized Assets
1.1 Introduction
1.2 Explaining tokenized assets
1.3 Tokenized assets: From concrete to abstract
1.3.1 Tokens backed by assets of known value
1.3.2 Tokens backed by assets of unknown value
1.3.3 New tokenized assets
1.4 Building investor confidence in tokens
1.5 The Framework for Token Confidence
1.6 Conclusions
References
Part 4 Financial Theory and Complexity Science
Chapter 8. Consensus Algorithms: A Matter of Complexity?
1.1 Introduction
1.1.1. Consensus algorithms
1.1.2. Problem context: Systemic risk
1.1.3. Complexity
1.1.4. Volatility
1.2 Information Theory of Complex Systems
1.2.1 Measures of complexity
1.2.2 Crutchfield’s statistical complexity
1.3 Analysis
1.3.1 PoW complexities
1.3.2 PoS complexities
1.3.3 Other PoS protocols
1.3.4 Hybrid protocols
1.3.5 Final comparison
1.4 Discussion and Future Work
1.4.1 Practical consequences
1.4.2 Future work: Application to next-generation consensus algorithms
1.4.3 Preventing chaos
References
Chapter 9. Blockchain Theory of Programmable Risk: Black Swan Smart Contracts
1.1 Introduction
1.1.1 Background
1.1.1.1 Definition of risk
1.1.1.2 A brief history of risk
1.2 Classical Risk Management
1.2.1 Theorizing risk in philosophy
1.2.2 Theorizing risk in social science
1.2.2.1 Prospect theory
1.2.2.2 Other social science theories
1.2.2.3 Market wizard practitioners
1.2.3 Theorizing risk in finance: Traditional approach
1.2.3.1 Modern portfolio theory
1.2.3.2 Value at risk
1.2.4 Theorizing risk in finance: Black swan approach
1.2.4.1 Black swan statistical theory
1.2.4.2 Black swan financial theory
1.2.4.3 Black swan financial theory challenges traditional financial theory
1.2.5 Black swan risk management: Markets to medicine
1.3 Risk Management with Blockchain-based Smart Contracts
1.3.1 Black swan risk management
1.3.2 Black swan smart contracts
1.3.2.1 Programmable risk smart contracts
1.3.2.2 Regulation of black swan smart contracts
1.4 Black Swan Smart Contracts: Applications
1.4.1 Insurance as a digital service
1.4.2 eBay for money
1.4.3 Information markets
1.4.4 myContingencyManager app (analogous to myFitness Manager)
1.4.5 Autonomous risk management as a smart network property
1.5 Objections and Critiques
1.6 Conclusion
References
Part 5 Policy, Regulation, and Incentives
Chapter 10. Entrepreneurial Exit: Developing the Cryptoeconomy
1. Institutional blockchain entrepreneurship
2. Creating the cryptoeconomy
3. Institutions, entrepreneurship and development
4. Cryptosecession as an economic development problem
5. Conclusion
References
Chapter 11. Towards Crypto-friendly Public Policy
1.1 Introduction
1.2 Economics of government support for blockchain technology
1.3 The economics of government control of blockchains
1.4 International strategy and crypto-secession
1.5 Blockchains and property rights
1.6 Creative destruction
1.7 Conclusion
References
Part 6 Income Inequality and Economic Inclusion
Chapter 12. The Implications of Blockchain for Income Inequality
1.1 Introduction
1.2 Income Inequality and Its Technological Dimensions
1.3 Potential Impacts of Blockchain Inequality upon Income Inequality
1.4 Implications for Public Policy
1.5 Conclusion
References
Chapter 13. The Mesh Economy: How Blockchain and Alternative Networks can Bridge the Digital Divide and Facilitate Economic Inclusion
1.1 Introduction
1.2 The Token Economy
1.3 Background: A Communications Ecosystem for Economic Empowerment
1.4 Changing Wealth Distribution with Distributed Ledger Technology
1.5 Analysis: Financial Inclusion without Financial Institutions
1.6 Financial Inclusion through Blockchain-powered Economic Identity
1.6.1 Blockchain Brings Speed and Transparency in Payments Systems
1.7 Mesh Networks: Internet Access For Financial Inclusion
1.8 Benefits of Mesh Networks
1.9 The Mesh Economy in Action
1.10 Conclusion and Implications
References
Glossary
Index