Proof of work as a Three-Sided Market
- 1RMIT University, Australia
Blockchain technology is the distributed, decentralised ledger technology underlying Bitcoin and other cryptocurrencies. We apply Oliver Williamson’s transactions cost analysis to the blockchain consensus mechanism. Blockchains reduce the costs of opportunism but are not ‘trustless’. We show that blockchains are trust machines. Blockchains are platforms for three-sided bargaining that convert energy-intensive computation into economically-valuable trust.
Keywords: Blockchain, transaction costs, industrialisation, platforms, bitcoin
Received: 12 Sep 2019;
Accepted: 13 Jan 2020.
Copyright: © 2020 Berg, Davidson and Potts. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY). The use, distribution or reproduction in other forums is permitted, provided the original author(s) and the copyright owner(s) are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.
* Correspondence: Dr. Chris Berg, RMIT University, Melbourne, Australia, firstname.lastname@example.org