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The economics of blockchain

Blockchains have brought a new phenomenon into the world: cryptocurrencies such as Bitcoin. We are interested in what we might term the microeconomics of a blockchain: how an economy can arise within a single blockchain which coins are spent for goods and services; the forces affecting the value of a cryptocurrencies and the control theory of stabilisation. The corresponding “macroeconomics” then raises the problem of the effect that cryptocurrencies and blockchain applications have on the wider economy. The latter will include the effect of competition from decentralised blockchain applications on traditional sectors.

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Legal and governmental issues

We wish to engage with regulators to find appropriate ways of regulating the holding and transaction of assets on the blockchain. We see this as a necessary precondition to our Mainstream goal. The expectation is that the application of such regulation will be completely (or nearly so) automatic, and that the blockchain itself will ensure that the powers of regulators and governments are not abused. This raises the topics of jurisdiction: whose laws apply to a particular user or asset, how to specify regulations in a way that allows automation, and how regulations apply to smart contracts. For smart contracts, how can we tell in advance that the result of a given contract is certain to satisfy regulations? How can we handle regulations changing during a single contract? How does data protection privacy legislation impact blockchain. Is blockchain a good infrastructure for e-government?