The Matter with Blockchain

by Henrique Schneider

Image source: BernhardMarr.com

Summary: This paper examines the economics of blockchain and cryptocurrencies. Three questions focus on the most important aspects: 1. What is the economics behind cryptocurrencies, or, are cryptocurrencies money? 2. Which are possible value-drivers of
cryptocurrencies, or, are cryptocurrencies a bubble? 3. How does blockchain influence the structures of governance, or, is blockchain revolutionary? While cryptocurrencies can be used as money, they are not without problems. Their commitments to a limited quantity as well as the absence of quality criteria ensuring temporal liquidity pose dangers to their further development. However, according to this paper, the most important contributions of the blockchain are to provide for a means with almost unlimited spatial liquidity and an innovative system of governance.

Keywords: Blockchain, cryptocurrency, parallel currencies, governance, distributed ledger, transparency, liquidity, bubble.

The Matter with Blockchain: Cryptocurrencies and more

The matter with cryptocurrencies and blockchain is convoluted: There are discussions about the technology, its programing code, its use and usefulness. There are controversies about whether cryptocurrencies are money, about their supply, transactions, and costs. There are disputes about their use, volatility, legality, links to the illegal world, and impact on the stability of financial systems. There is even debate about their energyconsumption. Settling all these issues is an impossible task. But it is useful to develop a framework of orientation from a non-partisan perspective. Non-partisan means that cryptocurrencies at large, and more generally, the blockchain technology, deserve an analysis that goes beyond hailing it as the all-innovative disruptor …

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The Matter with Blockchain: Cryptocurrencies and more