Economics Of Blockchain Research Articles

Caton James Lee (ed) (2022) The Economics of Blockchain and Cryptocurrency: A Transaction Costs Revolution

Caton James Lee (ed) (2022) The Economics of Blockchain and Cryptocurrency: A Transaction Costs Revolution

Shifting from Web2 to Web3: The adaptive creator experiences on blockchain-based video-sharing and streaming platforms

Blockchains have inspired imaginaries of a new iteration of the internet, hailed as Web3, where the power of centralized platform companies would be limited and the ownership of personal data and content could be retained by their individual owners and creators. Web3 is expected to facilitate the emergence of novel protocols and platforms that enable decentralized coordination of data and digital assets. This article examines critically the experiences and imaginaries of creators working on two blockchain-based video-sharing platforms: Theta.tv and Odysee. Building on the studies of creator culture and institutionalist blockchain economics and based on open-ended interviews with the early adopters of these platforms, the paper investigates how the creators experience these decentralized social media applications in terms of their processes of governance, community creation, and career development. We show how the affordances of blockchains and creator expectations can result in further convergence of community management and career-building functions potentially benefiting creators. We also show that the new wave of decentralization, against optimistic blockchain visions, has not yet led to the distributed ‘ownership’ of social media networks. Rather, while blockchains seem to have increased creator autonomy and added career opportunities, novel forms of platform governance and power have also introduced new perceptions of precarity among creators.

Advances in Blockchain and Crypto Economics

Over the past decade, blockchains and cryptocurrencies have taken a central stage in financial technology (FinTech) innovation. In 2020–2021, as the academic finance and management community began actively investigating this domain, we issued a call for papers for a special issue to encourage interdisciplinary research in this emerging area. This section of Management Science presents the first systematic collection of knowledge, both theoretical and empirical, focusing on blockchain economics, crypto assets, decentralized finance, and Web3 ecosystems. We describe the editorial protocol employed for this special issue (now included in this volume as a special section), summarize what we learn about the field, and introduce the 15 articles included in the special section. We also offer several observations to highlight foundational issues in the new field and to guide future research in this exciting new area at the intersection of technology and finance.

Token Incentives in a Volatile Crypto Market: The Effects of Token Price Volatility on User Contribution

ABSTRACT Crypto tokens, issued and managed via smart contracts, function as rewards in blockchain systems to encourage user participation. Distinct from monetary incentives, token incentives are uncertain in reward magnitude due to the large swings in token prices on crypto markets. By focusing on token price volatility, this study investigates how the reward uncertainty affects user contribution in a tokenized digital platform. Our empirical setting is Steemit, a platform where bloggers write posts and share token rewards based on their posts’ popularity. We find that while high token price volatility induces a large volume of blog posts, it diminishes post quality. The dichotomous effects are explained via two mechanisms: users’ direct reactions to reward uncertainties and their indirect reactions, mediated by altered token preference amid volatility shocks. Deeply exploring this dynamic process, our results reveal that token price volatility facilitates a platform’s network short-term effect but impairs long-term user creativity. Our empirical findings thus extend the literature on blockchain economics and cryptocurrencies and have practical implications for the design of incentive mechanisms on tokenized digital platforms.

The Law and Economics of Blockchain

This article examines the implications of Distributed Ledger Technology (a.k.a. blockchain) for several areas of law. While cryptocurrencies have received much attention, the implications of DLT are potentially far reaching. DLT raises interesting and important questions relating to rules of evidence, surrounding issues like hearsay and authentication. The advent of initial coin offerings has implications not only for how firms are financed but also for securities law in regulating such offerings. Cryptocurrencies themselves (e.g., Bitcoin) have raised serious issues for tax avoidance and taxation law. Relatedly, the rise of cryptocurrencies raises issues regarding the relationship between private and nationally issued currencies, and even the role and efficacy of monetary policy. Finally, DLT has practical implications for election law and voter turnout, with such technology already begun to be used for security purposes in online voting and permitted in 32 US states.

Book Reviews

Alexandros Seretakis of Trinity College Dublin reviews “Blockchain Economics: Implications of Distributed Ledgers: Markets, Communications Networks, and Algorithmic Reality,” edited by Melanie Swan, Jason Potts, Soichiro Takagi, Frank Witte, and Paolo Tasca. The Econlit abstract of this book begins: “Thirteen papers address topics in blockchain economics, focusing on blockchain technology's potential as an institutional technology.”

Blockchain Economics for Investment Professionals

The author reviews recent studies on blockchains, cryptocurrencies, and initial coin offerings (ICOs), and discusses their implications for institutional investors. The research on blockchain technology is organized into two broad categories: those with the economics of decentralized ledger technologies and those studying their impacts on the real economy. The author first clarifies the core functionalities of blockchains and then elaborates on issues concerning information distribution in generating decentralized consensus, industrial organization of mining pools, the role and dynamic pricing of crypto-tokens, and auditing with a federated blockchain.

Blockchain Economics and Marketing

Blockchain as a supporting platform for various cryptocurrencies is a technology that will not sell by itself, meaning that its success could not be built on technical efficiency of an algorithm alone. Understanding the real economic problems that the technology should aim at solving is a first step towards identifying the marketing beachheads for the technology. The branding of any blockchain can be categorized under an economic framework pointing to the types that have the potentials of being sustainable and disruptive. Selection of appropriate beachheads, verticals, services etc. should aim to promote the exchange of real goods and services, and/or the utilization the accounting/data advantage of the technology.

Economics of Blockchain

Claims blockchain is more than just ICT innovation, but facilitates new types of economic organization and governance. Suggests two approaches to economics of blockchain: innovation-centred and governance-centred. Argues that the governance approach — based in new institutional economics and public choice economics — is most promising, because it models blockchain as a new technology for creating spontaneous organizations, i.e. new types of economies. Illustrates this with a case study of the Ethereum-based infrastructure protocol and platform Backfeed.