review-article

Open access

Some simple economics of the blockchain

Authors:

Christian Catalini,

Joshua S. GansAuthors Info & Claims

Communications of the ACM, Volume 63, Issue 7

Pages 80 - 90

https://doi.org/10.1145/3359552

Published: 18 June 2020 Publication History

All formats PDF

Abstract

Blockchain technology can shape innovation and competition in digital platforms, but under what conditions?

Supplementary Material

p80-catalini-supplement (p80-catalini-supp.pdf)

One can think of a blockchain not only as a large-scale, distributed database, but also as an audit trail that is impossible to alter without being noticed.

Download
204.58 KB

References

[1]

Agrawal, A., Gans, J., and Goldfarb, A. The simple economics of machine intelligence. Harvard Business Rev., (2016), 17.

Google Scholar

[2]

Athey, S., Catalini, C., and Tucker, C. The Digital Privacy Paradox: Small Money, Small Costs, Small Talk. National Bureau of Economic Research Working Paper, 2017.

Google Scholar

[3]

Athey, S., Parashkevov, I., Sarukkai, V., and Xia, J. Bitcoin pricing, adoption, and usage: Theory and evidence. Research paper, Stanford University, 2016.

Google Scholar

[4]

Ausubel, L.M.et al. The lovely but lonely Vickrey auction. Combinatorial Auctions 17 (2006), 22--26.

Google Scholar

[5]

Beck, R., Czepluch, J. S., Lollike, N., and Malone, S. Blockchain---The gateway to trust-free cryptographic transactions. ECIS, 2016, Paper 153.

Google Scholar

[6]

Bekkers, R., Catalini, C., Martinelli, A., Righi, C., and Simcoe, T. Disclosure rules and declared essential patents. Discussion paper, National Bureau of Economic Research, 2019.

Google Scholar

[7]

Böhme, R., Christin, N., Edelman, B., and Moore, T. Bitcoin: Economics, technology, and governance. J. Economic Perspectives 29, 2 (2015), 213--38.

Crossref

Google Scholar

[8]

Bordo, M.D. and Levin, A.T. Central Bank Digital Currency and the Future of Monetary Policy. National Bureau of Economic Research Working Paper, 2017.

Crossref

Google Scholar

[9]

Bresnahan, T F. and Trajtenberg, M. General-purpose technologies---Engines of growth? J. Econometrics 65, 1 (1995), 83--108.

Crossref

Google Scholar

[10]

Catalini, C. How blockchain applications will move beyond finance. Harvard Business Rev., (2017).

Google Scholar

[11]

Catalina, C. How blockchain technology will impact the digital economy. Oxford Business Law Blog, (2017).

Google Scholar

[12]

Catalini, C. and Boslego, J. Blockchain Technology and Organization Science: Decentralization Theatre or Novel Organizational Form? MIT Working Paper, 2019.

Google Scholar

[13]

Catalini, C., Boslego, J. and Zhang, K. Technological Opportunity, Bubbles and Innovation: The Dynamics of Initial Coin Offerings. Working Paper, 2018.

Google Scholar

[14]

Catalini, C. and Gans, J. S. Initial coin offerings and the value of crypto Tokens. Discussion paper. National Bureau of Economic Research, 2018.

Crossref

Google Scholar

[15]

Catalini, C. and Tucker, C. When early adopters don't adopt. Science, 357, 6347 (2017), 135--136.

Crossref

Google Scholar

[16]

Davidson, S., De Filippi, P. and Potts, J. Economics of blockchain. Working Paper, 2016.

Crossref

Google Scholar

[17]

Dwyer, G.P. The economics of Bitcoin and similar private digital currencies. J. Financial Stability 17 (2015), 81--91.

Crossref

Google Scholar

[18]

Edelman, B., Ostrovsky, M. and Schwarz, M. Internet advertising and the generalized second-price auction: Selling billions of dollars worth of keywords. Amer. Economic Rev. 97, 1 (2007), 242--259.

Crossref

Google Scholar

[19]

Gandal, N. and Halaburda, H. Competition in the Cryptocurrency Market. NET Institute Working Paper, 2014.

Google Scholar

[20]

Gans, J.S. and Halaburda, H. Some economics of private digital currency. Economic Analysis of the Digital Economy, (2015), 257--276. University of Chicago Press.

Google Scholar

[21]

Halaburda, H. and Sarvary, M. Beyond Bitcoin: The Economics of Digital Currencies. Springer, 2016.

Crossref

Google Scholar

[22]

Helpman, E. General Purpose Technologies and Economic Growth. MIT Press, Cambridge, MA, 1998.

Google Scholar

[23]

Henderson, R.M. and Clark, K.B. Architectural innovation: The reconfiguration of existing product technologies and the failure of established firms. Administrative Science Q. (1990), 9--30.

Google Scholar

[24]

Iansiti, M. and Lakhani, K.R. The truth about blockchain. Harvard Business Rev. 95, 1 (2017), 118--127.

Google Scholar

[25]

Ito, J., Narula, N. and Ali, R. The blockchain will do to the financial system what the Internet did to media. Harvard Business Rev. (2017)

Google Scholar

[26]

Kiviat, T.I. Beyond bitcoin: Issues in regulating blockchain transactions. Duke LJ 65, 569 (2015).

Google Scholar

[27]

Lerner, J. and Tirole, J. Some simple economics of open source. J. Industrial Economics 50, 2 (2002), 197--234.

Google Scholar

[28]

Luca, M. Designing online marketplaces: Trust and reputation mechanisms. Innovation Policy and the Economy 17, 1 (2017), 77--93.

Crossref

Google Scholar

[29]

Malinova, K. and Park, A. Market Design with Blockchain Technology. Working Paper, 2016.

Google Scholar

[30]

Mann, S., Nolan, J. and Wellman, B. Sousveillance: Inventing and using wearable computing devices for data collection in surveillance environments. Surveillance & Society 1, 3 (2002), 331--355.

Crossref

Google Scholar

[31]

Milgrom, P.R. Putting auction theory to work. Cambridge University Press, 2004.

Crossref

Google Scholar

[32]

Morton, F.S. Consumer benefit from use of the Internet. Innovation Policy and the Economy 6 (2006), 67--90.

Crossref

Google Scholar

[33]

Moser, P. and Nicholas, T. Was electricity a general-purpose technology? Evidence from historical patent citations. Amer. Economic Rev. 94, 2 (2004), 388--394.

Crossref

Google Scholar

[34]

Nakamoto, S. Bitcoin: A peer-to-peer electronic cash system. White Paper, 2008.

Google Scholar

[35]

Narayanan, A., Bonneau, J., Felten, E., Miller, A., and Goldfeder, S. Bitcoin and Cryptocurrency Technologies: A Comprehensive Introduction. Princeton University Press, 2016.

Digital Library

Google Scholar

[36]

Raskin, M., and Yermack, D. Digital currencies, decentralized ledgers, and the future of central banking. National Bureau of Economic Research Working Paper, 2016.

Crossref

Google Scholar

[37]

Rosenberg, N. and Trajtenberg, M. A general-purpose technology at work: The Corliss steam engine in the late 19^th century US. National Bureau of Economic Research Working Paper, 2001.

Crossref

Google Scholar

[38]

Roth, A.E. The economist as engineer: Game theory, experimentation, and computation as tools for design economics. Econometrica 70, 4 (2002), 1341--1378.

Crossref

Google Scholar

[39]

Roth, A.E. The art of designing markets. Harvard Business Rev. 85, 10 (2007), 118.

Google Scholar

[40]

Roth, A.E., and Ockenfels, A. Last-minute bidding and the rules for ending second-price auctions: Evidence from eBay and Amazon auctions on the Internet. Amer. Economic Rev. 92, 4 (2002), 1093--1103.

Crossref

Google Scholar

[41]

Rothkopf, M.H., Teisberg, T.J., and Kahn, E.P. Why are Vickrey auctions rare? J. Political Economy 98, 1 (1990), 94--109.

Crossref

Google Scholar

[42]

Rysman, M., and Schuh, S. New innovations in payments. Innovation Policy and the Economy 17, 1 (2017), 27--48.

Crossref

Google Scholar

[43]

Seretakis, A. Blockchain, Securities Markets and Central Banking. Working Paper, 2017.

Google Scholar

[44]

Stiglitz, J.E. Information and the change in the paradigm in economics. Amer. Economic Rev. 92, 3 (2002), 460--501.

Crossref

Google Scholar

[45]

Tucker, C. and Catalini, C. What blockchain can't do. Harvard Business Rev. (2018).

Google Scholar

[46]

Von Hippel, E. Democratizing Innovation. MIT Press, 2005.

Google Scholar

[47]

Von Hippel, E.A. Open source projects as horizontal innovation networks-by and for users. 2002.

Crossref

Google Scholar

[48]

Von Hippel, E. and Von Krogh, G. Open source software and the private collective innovation model: Issues for organization science. Organization Science 14, 2 (2003), 209--223.

Google Scholar

[49]

Walport, M. Distributed ledger technology: Beyond block chain. U.K. Government Office for Science, 2016.

Google Scholar

[50]

Wright, A. and De Filippi, P. Decentralized blockchain technology and the rise of lex cryptographia. 2015.

Crossref

Google Scholar

Cited By

View all

Wang FYe QLi JShi W(2025)Blockchain adoption and analyst forecast accuracyResearch in International Business and Finance10.1016/j.ribaf.2024.10259373(102593)Online publication date: Jan-2025
https://doi.org/10.1016/j.ribaf.2024.102593
Cumming DDrobetz WMomtaz PSchermann N(2025)Financing decentralized digital platform growth: The role of crypto funds in blockchain-based startupsJournal of Business Venturing10.1016/j.jbusvent.2024.10645040:1(106450)Online publication date: Jan-2025
https://doi.org/10.1016/j.jbusvent.2024.106450
Gregory RBeck RHenfridsson OYaraghi N(2024)Cooperation Among Strangers: Algorithmic Enforcement of Reciprocal Exchange with Blockchain-Based Smart ContractsAcademy of Management Review10.5465/amr.2023.0023Online publication date: 2-Jul-2024
https://doi.org/10.5465/amr.2023.0023
Show More Cited By

Index Terms

Some simple economics of the blockchain
1. Applied computing
  1. Electronic commerce
    1. Digital cash
    2. E-commerce infrastructure
2. Security and privacy
  1. Human and societal aspects of security and privacy
    1. Economics of security and privacy

Recommendations

Blockchain Technology Explained: The Simplified Guide On Blockchain Technology (2018) Blockchain Wallet, Blockchain Explained
Economics of Permissioned Blockchain Adoption
We construct an economic framework for understanding the incentives of the participants of a permissioned blockchain for supply chains and other related industries. Our study aims to determine whether adoption of blockchain is socially beneficial and ...
Blockchain Technology Explained: (2018)

Comments

Information & Contributors

Information

Published In

Communications of the ACM Volume 63, Issue 7

July 2020

102 pages

ISSN:0001-0782

EISSN:1557-7317

DOI:10.1145/3407166

Editor:
Andrew A. Chien
Association for Computing Machinery, New York, NY

Issue’s Table of Contents

Permission to make digital or hard copies of part or all of this work for personal or classroom use is granted without fee provided that copies are not made or distributed for profit or commercial advantage and that copies bear this notice and the full citation on the first page. Copyrights for third-party components of this work must be honored. For all other uses, contact the Owner/Author.

Publisher

Association for Computing Machinery

New York, NY, United States

Publication History

Published: 18 June 2020

Published in CACM Volume 63, Issue 7

Check for updates

Qualifiers

Review-article
Popular
Refereed

Contributors

Other Metrics

View Article Metrics

Bibliometrics & Citations

Bibliometrics

Article Metrics

169
Total Citations
View Citations
29,435
Total Downloads

Downloads (Last 12 months)2,754
Downloads (Last 6 weeks)329

Reflects downloads up to 09 Nov 2024

Other Metrics

View Author Metrics

Citations

Cited By

View all

Wang FYe QLi JShi W(2025)Blockchain adoption and analyst forecast accuracyResearch in International Business and Finance10.1016/j.ribaf.2024.10259373(102593)Online publication date: Jan-2025
https://doi.org/10.1016/j.ribaf.2024.102593
Cumming DDrobetz WMomtaz PSchermann N(2025)Financing decentralized digital platform growth: The role of crypto funds in blockchain-based startupsJournal of Business Venturing10.1016/j.jbusvent.2024.10645040:1(106450)Online publication date: Jan-2025
https://doi.org/10.1016/j.jbusvent.2024.106450
Gregory RBeck RHenfridsson OYaraghi N(2024)Cooperation Among Strangers: Algorithmic Enforcement of Reciprocal Exchange with Blockchain-Based Smart ContractsAcademy of Management Review10.5465/amr.2023.0023Online publication date: 2-Jul-2024
https://doi.org/10.5465/amr.2023.0023
Tarzijan JSnihur Y(2024)Centralization Decisions in Multisided Platform PortfoliosAcademy of Management Perspectives10.5465/amp.2023.0075Online publication date: 2-May-2024
https://doi.org/10.5465/amp.2023.0075
Zhang JPan LWu J(2024)BitTraceInternational Journal of Information Technologies and Systems Approach10.4018/IJITSA.33900317:1(1-21)Online publication date: 9-Apr-2024
https://dl.acm.org/doi/10.4018/IJITSA.339003
Pramanik S(2024)Blockchain Technology for Corporate ResponsibilityBuilding Sustainable Human Resources Management Practices for Businesses10.4018/979-8-3693-1994-9.ch002(16-29)Online publication date: 17-May-2024
https://doi.org/10.4018/979-8-3693-1994-9.ch002
Deep GVerma J(2024)Exploring the Uncharted WatersAdoption of NFTs and Cryptocurrency in Marketing10.4018/979-8-3693-1392-3.ch007(68-90)Online publication date: 22-Mar-2024
https://doi.org/10.4018/979-8-3693-1392-3.ch007
Xu J(2024)Blockchain-Based Technology in Corporate GovernanceHarnessing Technology for Knowledge Transfer in Accountancy, Auditing, and Finance10.4018/979-8-3693-1331-2.ch002(26-42)Online publication date: 23-Feb-2024
https://doi.org/10.4018/979-8-3693-1331-2.ch002
Gul IRaziq AKhan M(2024)Towards Sustainable Supply Chains With BlockchainAchieving Secure and Transparent Supply Chains With Blockchain Technology10.4018/979-8-3693-0482-2.ch002(18-37)Online publication date: 18-Jan-2024
https://doi.org/10.4018/979-8-3693-0482-2.ch002
Sun XWang YHuang YZhang Y(2024)How to Reshape the Selection Boundaries between Traditional and Digital Supply Chain Finance Based on the Pledge Rate and Default Loss: Two Tripartite Game ModelsSystems10.3390/systems1207025312:7(253)Online publication date: 13-Jul-2024
https://doi.org/10.3390/systems12070253
Show More Cited By

View Options

View options

PDF

View or Download as a PDF file.

PDF

eReader

View online with eReader.

eReader

Digital Edition

View this article in digital edition.

Digital Edition

Magazine Site

View this article on the magazine site (external)

Magazine Site

Get Access

Login options

Check if you have access through your login credentials or your institution to get full access on this article.

Abstract

Supplementary Material

References

Cited By

Index Terms

Recommendations

Blockchain Technology Explained: The Simplified Guide On Blockchain Technology (2018) Blockchain Wallet, Blockchain Explained

Economics of Permissioned Blockchain Adoption

Blockchain Technology Explained: (2018)

Comments

Information

Published In

Publisher

Publication History

Check for updates

Qualifiers

Contributors

Other Metrics

Bibliometrics

Article Metrics

Other Metrics

Citations

Cited By

View options

PDF

eReader

Digital Edition

Magazine Site

Get Access

Login options

Full Access

Figures

Other

Share

Share this Publication link

Share on social media

Affiliations