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Understanding the Blockchain Economy

An Introduction to Institutional Cryptoeconomics

Chris Berg, Sinclair Davidson and Jason Potts

Blockchains are the distributed ledger technology that powers Bitcoin and other cryptocurrencies. But blockchains can be used for more than the transfer of tokens – they are a significant new economic infrastructure. This book offers the first scholarly analysis of the economic nature of blockchains and the shape of the blockchain economy. By applying the institutional economics of Ronald Coase and Oliver Williamson, this book shows how blockchains are poised to reshape the nature of firms, governments, markets, and civil society.
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Chapter 9: Capitalism after Satoshi

Chris Berg, Sinclair Davidson and Jason Potts

Extract

This chapter explores the long-run economic and policy consequences of wide-spread blockchain technology adoption. Blockchains disrupt the historical rationale for much modern economic policy. the authors formulate the institutional logic of a co-evolutionary model of the demand for economic policy. In the industrial revolution, complex production led to economic growth, but that complexity had to be managed through hierarchical governance. Karl Marx and Joseph Schumpeter both identified the consequences of hierarchy for power relations, creating a demand for public policy to counteract the effects of hierarchy. Blockchains offer the dehierarchicalisation of capitalism, and a corresponding reduction in demand for anti-hierarchy public policy.

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