Blockchains as Implementable Mechanisms: Crypto-Ricardian Rent and a Crypto-Coase Theorem

• Main Author: Prateek Goorha
• Format: Article
• Language: English
• Published: The British Blockchain Association 2018-09-01
• Series: The Journal of The British Blockchain Association
• Subjects: Blockchain; Cryptoeconomics; Mechanism Design; Ricardian rent; Coase theorem; Identity; Asset elasticity
• Online Access: https://jbba.scholasticahq.com/article/4838-blockchains-as-implementable-mechanisms-crypto-ricardian-rent-and-a-crypto-coase-theorem

We suggest that the promise of blockchains is to be found not merely in the more proximate fact that they are immutable ledgers, but the broader impact that comes from blockchains as a template for mutable design. We discuss the mechanism design theory to suggest where blockchains may or may not be seen as implementable mechanisms. We further discuss the idea of defining self-identity as an `elastic asset' using the blockchain in order to generate Ricardian rent from the crypto economy. We suggest how this connection might be exhibited by the Bitcoin blockchain mechanism by discussing the shape of the crypto economy it produces. Finally, we develop an application of the Coase theorem for the crypto-economy as a method for analyzing interactions between the traditional economy and the crypto-economy.