Blockchain Economics: Implications of Distributed Ledgers

"I strongly recommend this book to anyone interested in the multi- and interdisciplinary approaches to blockchain economics. These international scholars and practitioners have adopted new approaches to analyze blockchain based on economic principles spanning across the biological, chemical and physical fundamentals. Ideas associated with natural sciences were deplored to look at implications of distributed ledgers, breaking away from traditional views, and giving the readers a fresh perspective to many previously unresolved issues."

About the Editors

Jason Potts has a PhD from Lincoln University in New Zealand on theoretical foundations of evolutionary and complexity economics. He is Professor of Economics in the School of Economics, Finance and Marketing at RMIT University, and Director of the Blockchain Innovation Hub, established in 2017 as the first social science research institute on Blockchain in the world. Dr Potts is a Fellow of the Academy of Social Sciences of Australia and is one of Australia's top economists, specializing in economic growth, innovation and institutions, as well as the theory of economic evolution and complexity. His work has been applied to the economics of creative industries, intellectual property and cities, and common pool resources. He received the Australian Research Council's Future Fellowship, and won the International Joseph A Schumpeter Prize. He has written five books and published over 80 articles on these themes, and is a regular media commentator. He is currently the Vice President of the International Joseph A Schumpeter Society, an Adjunct Fellow at the Institute of Public Affairs, editor of the Cambridge Elements series on Evolutionary Economics, and editor of the Journal of Institutional Economics.

Melanie Swan is the Founder of the Institute for Blockchain Studies, a Technology Theorist in the Philosophy Department at Purdue University, and a Singularity University faculty member. Her education includes an MBA in Finance from Wharton at the University of Pennsylvania, an MA in Philosophy from the New School in New York, NY, an MA in Contemporary Continental Philosophy from Kingston University London and Université Paris 8, and a BA in French and Economics from Georgetown University. Her primary research interests are Blockchain Economics and Blockchain Network Theory. In pure research, Melanie applies quantitative methods from mathematics, physics, complexity science, and machine learning to blockchains. In applied research, she focuses on payment channels, debt, net-settled capital, risk, integrated business ledgers, and blockchain health economics. Regarding social organization, she has proposed the "Smart City Cryptopolis and Blockchain Enlightenment," a social theory of dignity for a multi-species society of human, algorithm, and machine. In applied economics, she has formulated algorithmic trust, a network mechanism that moderates credit availability and facilitates blockchain markets to Nash equilibria more quickly than classical markets. Advanced conceptual research focuses on BCI cloudminds, the Brain as a DAC, the biocryptoeconomy, and blocktime (the native time domain of blockchains).

Soichiro Takagi is Executive Research Fellow and the General Manager of Research Division at the Center for Global Communications (GLOCOM) at the International University of Japan. He is the director of the Blockchain Economic Research Lab at GLOCOM and also a Visiting Associate Professor at The University of Tokyo. He also served as an Asia Program Fellow at Harvard Kennedy School, etc. His major field is information economics, focusing on the relationship between information technology and the economy. He has examined a variety of topics including offshore outsourcing, cloud computing, open data, sharing economy, digital currency, and blockchain. He has authored many books and articles, including Blockchain Economics (in Japanese) and Reweaving the Economy: How IT Affects the Borders of Country and Organization (University of Tokyo Press). He received a PhD in Information Studies from The University of Tokyo.

Paolo Tasca is a Digital Economist specializing in P2P financial systems. An advisor on blockchain technologies for international organizations such as the EU Parliament and the United Nations, Paolo is the founder and Executive Director of the Centre for Blockchain Technologies at University College London (UCL CBT). Previously, he was Lead Economist on digital currencies and P2P financial systems at the Deutsche Bundesbank in Frankfurt. Paolo is also co-author of the bestseller FINTECH Book, co-editor of the book Banking Beyond Banks and Money, Associate Editor of the Journal of Risk Finance since 2016, and Guest Editor of the Journal of Digital Banking since 2017. He is author of various scientific papers about blockchain published by prestigious international scientific journals. Dr Tasca holds an MA in Politics and Economics summa cum laude from the University of Padua and an MSc in Economics and Finance from Ca' Foscari, Venice. He did his PhD studies in Business between Ca' Foscari, Venice and ETH, Zürich. Other recent appointments include being a Permanent Member of ISO TC 307 committee on standardization of blockchain systems (ISO), Member of the DLT/1 technical committee at the British Standards Institution (BSI), Adjunct Fellow at Griffith University Law Futures Centre, Honorary Professor at Sogang University Blockchain Research Centre, and Honorary Research Associate at University of Cape Town Financial Innovation Lab.

Frank Witte completed an MSc in Theoretical Astrophysics (1992) at Utrecht University in the Netherlands and received his PhD in Theoretical Physics (1995) from the University of Heidelberg. As an Assistant and Associate Professor, he taught theoretical physics at Utrecht University and University College Utrecht (1997–2010) and published on diverse topics such a phase-transitions in non-equilibrium field theories, boundstates of fermions under gravitational interactions, and the foundations of quantum game theory. As his research interests shifted toward the application of physics-inspired methods and concepts in economics; he accepted a position in the Department of Economics of University College London where he is working today. He teaches Economics of Science, with a forthcoming textbook to be published by World Scientific, and Environmental Economics as well as Computational Methods for Economists. Frank has spent extended academic visits, including teaching and research, at St. John's College, Cambridge (UK), the Quantum Optics & Laser Science group at Imperial College London and as International Fellow of Grinnell College (US).

About the Contributors

Dr Darcy W E Allen is a Postdoctoral Research Fellow in the Blockchain Innovation Hub at RMIT University in Melbourne and an Adjunct Fellow at the Institute of Public Affairs. He is an institutional economist focusing on entrepreneurial discovery of opportunities for new technologies. His current research focuses on the economics and political economy of blockchain technology as a form of new economic infrastructure. Dr Allen's scholarly contributions have appeared in a wide range of journals, books, and conference proceedings including the International Journal of the Commons, the Journal of Peer Production, and New Perspectives on Political Economy. He has appeared as an expert witness to provide evidence before a number of state and federal Australian parliamentary inquiries; his commentary has been featured widely across the print and the electronic media, and he is the former editor of Australia's longest running quarterly magazine on politics and culture. His PhD dissertation in economics, examining the economics of the development of new technologies, was passed outright at RMIT University in 2017.

Chris Berg is a Senior Research Fellow at the RMIT Blockchain Innovation Hub, an Adjunct Fellow with the Institute of Public Affairs, and an Academic Fellow with the Australian Taxpayers' Alliance. Dr Berg is the author of six books including The Libertarian Alternative. He is one of Australia's most prominent voices for free markets and individual rights. He is a widely published commentator on blockchains, cryptocurrencies, privacy, and civil liberties. He has been a regular newspaper columnist, is a frequent media commentator on television and radio, and appears regularly throughout the electronic press. He holds a PhD in Economics from RMIT University, which was awarded in 2016, and a Bachelor's degree in History and Political Science from the University of Melbourne. His scholarly contributions on areas such as Australian history, economic methodology, regulation, and technological change civil liberties have appeared in journals such as Australian Journal of Political Science, Econ Journal Watch, Ledger, and Trends in Anaesthesia and Critical Care. With Sinclair Davidson and Jason Potts, he is developing the field of institutional cryptoeconomics, which studies the consequences of distributed ledger technology for firms, markets, and governments.

Sinclair Davidson is Professor of Institutional Economics in the School of Economics, Finance and Marketing at RMIT University; an Associate with the RMIT Blockchain Innovation Hub; an Adjunct Research Fellow at the Institute of Public Affairs; and an Academic Fellow at the Australian Taxpayers' Alliance. He is a member of the Centre for Independent Studies Council of Academic Advisers. Sinclair has published in academic journals such as the European Journal of Political Economy, Journal of Economic Behavior and Organization, Economic Affairs, and The Cato Journal. He is a regular contributor to public debate. His opinion pieces have been published in The Age, The Australian, Australian Financial Review, The Conversation, Daily Telegraph, Sydney Morning Herald, and Wall Street Journal Asia. He blogs at Catallaxy Files and tweets as @SincDavidson.

Renato P dos Santos is a Researcher on blockchain technologies and Graduate Professor at the Lutheran University of Brazil. He is a member of the British Blockchain Association, holds a DSc (Physics) degree and did his postdoctoral work in Artificial Intelligence, and he also did his specializations in data science and blockchain technologies. He is also the author of more than 100 scientific papers about the philosophy of cryptocurrencies, data science in STEM education, second life in STEM education, web 2.0 technologies, ethnoscience, physics teaching, artificial intelligence and computer algebra in physics, and quantum field theory in prestigious scientific periodicals and events around the world. He is a Reviewer and Editor of prestigious scientific periodicals and events around the world and has developed systems for second life, Forex market, qualitative physics, and computer algebra.

Olga Feldmeier is the CEO of SMART VALOR, a Swiss-based blockchain start-up building a decentralized marketplace for tokenized alternative investments. Olga has extensive experience working in the banking and financial services sector for global brands such as Barclays Capital, UBS Wealth Management, and Boston Consulting Group, where she focused on strategy projects at financial institutions such as Deutsche Bank, Unicredit, and Commerzbank. Prior to founding SMART VALOR, Olga held the position of Commercial Managing Partner at the prominent Silicon Valley Bitcoin startup Xapo. Olga is a founding member of Switzerland's Crypto Valley community and is the producer of the ICO Summit — the first global conference focusing on blockchain crowdfunding in Switzerland. She is also a mentor at the largest European accelerator program, Kickstart Accelerator, and regularly delivers talks at conferences and universities on the regulation of blockchain industry, the tokenization of assets, and the disruption of the banking industry.

John Hargrave is the Publisher of Bitcoin Market Journal, (www.bitcoinmarketjournal.com), the leading investor website for bitcoin, altcoins, and new token offerings. He leads a team of 75 analysts, journalists, and researchers who have evaluated over 1,500 new token projects, developing best practices for driving value for both token creators and investors. He is also the CEO of Media Shower (www.mediashower.com), the leading blockchain media company. In his paper "How blockchain will decentralize the media", he lays out a new vision for media companies, based on the principles of radical decentralization and citizen ownership. He and his team are actively building media shower into that model media company. Hargrave is also the author of four books, including Blockchain for Everyone (Simon & Schuster/Gallery Books, 2019), the first book to explain blockchain technology to the non-technical reader. Hargrave received his MBA from Babson College and frequently writes and speaks about blockchain all over the world, building global confidence.

John B Hooks is a Distributed Ledger (Blockchain) Technologist and Venture Capital/Private Equity Advisor and Council Member in the Technology and Telecommunications Practice of the Gerson Lehrman Group (GLG), and an Advisory Board Member to several emerging Blockchain, and Big Data/IoT and AI companies. Currently, Mr Hooks is the Chairman, President, and CEO of Spectramesh, Inc. Spectramesh combines wireless advances and microelectronics with the emerging technology of blockchain in a core mesh router capable of communicating across a mixed spectrum of wireless TCP/IP, Bluetooth, and IoT spectra — a first for router devices. He is also the Chief Data Engineer and AI Business Development Executive at AmmbrTech US. Mr Hooks holds a certificate in Private Equity and Corporate Governance from the Harvard Graduate School of Business, and an MBA, Financial Management degree from the Lubin School of Business, Pace University. He was also a doctoral candidate at New York University and held concurrent appointments to the faculty of the University of Bridgeport and Pace University. John Hooks has held several securities licenses including Series 7, 63, 65, and 66 while he was an advisor with UBS Private Wealth.

Dr Alex Kayal obtained his PhD from the Interactive Intelligence section of the Intelligent Systems Department, Delft University of Technology in the Netherlands, and his Masters from the Royal Institute of Technology (KTH) in Sweden. His PhD thesis focused on synthesizing and evaluating social commitment models for location sharing in the family life, grounded in user requirements, with the aim of better supporting (and understanding) human norms and values. He currently works as a Data Scientist for Exact, a Dutch business software provider, where he focuses on leveraging artificial intelligence, machine learning, and blockchain to streamline and automate manual business processes.

Rumy Narayan is a doctoral candidate at the School of Management, University of Vaasa, Finland. Her research focuses on sustainability networks, innovation systems, and sociotechnical transitions. Prior to her doctoral studies, she has been a Business Journalist, an Information Analyst, and Sustainability Consultant and Manager. In these roles, she has worked with companies like Walmart and Tetra Pak, and organizations like Environmental Protection Encouragement Agency (EPEA), a scientific research consultancy working with the Cradle-to-Cradle design concept. She has also been part of developing a certificate program on Corporate Social Responsibility (CSR) for the Indian Institute of Corporate Affairs (IICA).

Mikayla Novak is a Postdoctoral Research Fellow with the RMIT Blockchain Innovation Hub, RMIT University (Melbourne, Australia). An academically trained economist, Mikayla Novak attained a First Class Honours degree at The University of Queensland (Brisbane, Australia) and was awarded a doctorate at RMIT University. Prior to her appointment at RMIT University, Novak had worked for public sector agencies in Australia and New Zealand as well as for industry associations and nonprofit think tanks. Her research specialties include institutional cryptoeconomics, public finance and public sector economics, regulation and regulatory governance, economic sociology, public choice, and institutional economics. The academic writing of Mikayla Novak includes contributions toward an understanding of economic and social dimensions of inequality, evolutionary dimensions of cultural and social change, and the political economy of blockchain technology. Novak has been a prolific contributor to public policy debates, having written over 240 opinion articles as well as research papers and peer-review publications. Mikayla Novak is the author of Inequality: An Entangled Political Economy Perspective (Palgrave Macmillan).

Dr Judith Redi obtained her PhD from the University of Genoa (Italy) in 2010, with a thesis on learning machines for objective image quality assessment, final result of a project on visual quality in displays funded by Philips research. After receiving the award for the best ICT thesis from University of Genoa, she moved to Eurecom (France) for a postdoc on Digital Image Forensics and 3D face recognition. In October 2010, she became an Assistant Professor at the Multimedia Computing group of Delft University of Technology, Faculty of Electrical Engineering, Mathematics and Computer Science (EEMCS). At TU Delft, she worked on image and video understanding toward the maximization of the Quality of (multimedia) Experiences. This is a highly multidisciplinary field that connects visual perception, cognitive science and engineering, machine learning, and computer vision. In 2015, she also became a Faculty fellow at the Benelux Center for Advanced Studies of IBM, where she contributed to the implementation of the Inclusive Enterprise vision. In February 2016, she became a part-time researcher at the Distributed and Interactive Systems group of CWI. Finally, convinced that we need more girls in the field, as a DEWIS (Delft Women in Science) ambassador in EEMCS, she works to promote activities to support gender diversity and women networking within her faculty. Since July 2017, she has been a Principal Data Scientist at Exact Business Software in the Netherlands.

Erich C G Schnoeckel has been infected by the Blockchain virus some 5 years ago and started researching the effect of the technology in different industries since. Erich has been responsible for the Blockchain projects at Exact Software and now acts as an independent Consultant and Advisor at 3Thin.gs Blockchain from where he advises several companies and government institutions on the use of technology. Erich is also one of the founders of Dint.io from where ICO's ratings are used to pool and syndicate investments into these ICOs. Erich regularly speaks at conferences on Health, Fintech, and Supply Chain solutions with a particular interest on building consortia and optimizing value chains with their business processes and also shares that knowledge during lectures at schools in the Netherlands, Belgium, and the UK. Erich holds a degree in Modern Japanese Studies and Economics from Erasmus University Rotterdam.

Navroop Sahdev is a Fellow at MIT Connection Science and holds a host of leadership roles in the DLT space, both as a practitioner as well as a researcher. An economist by training, Navroop is currently building a FinTech company that seeks to leverage blockchain technology. She is also a Research Associate at the Centre for Blockchain Technologies (CBT) at University College London and holds three Masters' degrees in IP Management, Economics of Innovation, and Applied Economics. A United Nations Youth Delegate for 2017, Navroop recently co-authored Hyperledger's Blockchain for Business online course. She speaks regularly at FinTech and blockchain conferences, and currently serves on the advisory board of a host of blockchain companies across various industries. Previously, she has worked at Harvard University and the United Nations Environment Programme. Her research interests are focused on distributed ledger technologies, game theory, networks theory, and complex systems science.

Arisa Siong is an Economist by training and trade. She honed her economic cynicism at London School of Economics where she obtained a BSc and MSc in Economics (Distinction) and subsequently has worked as an economic consultant for over a decade. She has advised on regulatory, competition, policy formulation, and market design issues in a range of industries including ICT, media, and financial services. Arisa currently works for the Infocomm and Media Development Authority of Singapore with a focus on digital economy issues. She has written her chapter in a personal capacity. Her view is that new technologies will fundamentally alter how market decisions are made, e.g. blockchain (autonomous), AI (automatic), and IoT and robotics (machine executed), and in doing so create new market constructs and signals (tokens and data). This will present a need for new economic frameworks and analytical tools to examine new market dynamics. There will also be an increasing need to look at the interplay between law, economics, technology, and public policy — the economic scholarship will benefit from collaborating with the legal, business, and tech communities in examining regulatory, governance, and policy issues in the digital world.

Annika Tidström is a Professor at the School of Management, University of Vaasa, Finland. Her research interests are related to business networks, industrial relationships, coopetition, tensions, and strategy-as-practice. She has published several articles in journals such as Industrial Marketing Management, Journal of Business and Industrial Marketing, Journal of Purchasing and Supply Management, and Scandinavian Journal of Management. Professor Tidström is an active member of the international coopetition research community, and she is also involved in the Industrial Marketing and Purchasing (IMP) group.

Horst Treiblmaier is a Professor in International Management at MODUL University Vienna, Austria. He received a PhD in Management Information Systems in 2001 from the Vienna University of Economics and Business in Austria and worked as a Visiting Professor at Purdue University, University of California, Los Angeles (UCLA), University of British Columbia (UBC), University of Technology in Sydney (UTS), and the Kazakhstan Institute of Management, Economics and Strategic Research (KIMEP). He has more than 15 years of experience as a researcher and consultant and has worked on projects with Microsoft, Google, and the United Nations Industrial Development Organization (UNIDO). His research interests include the economic and business implications of blockchain, cryptoeconomics, methodological and epistemological problems of social science research, and gamification. Currently, he serves on the board of the "City of Blockchain", an Austrian association promoting the blockchain and cryptographic technologies. His research has appeared in journals such as Information Systems Journal, Structural Equation Modeling, The DATA BASE for Advances in Information Systems, Communications of the Association for Information Systems, Information & Management, Journal of Electronic Commerce Research, Journal of Global Information Management, Schmalenbach Business Review, and Wirtschaftsinformatik (Business & Information Systems Engineering).

Uwe J Umlauff is a Serial Entrepreneur, Portfolio Investor, leisure-time Database Coder, and not to forget Director of Steinbeis Transfer Institute Innovation & Business Creation in Munich, an institute of the Steinbeis University Berlin with a focus on entrepreneurship, start-up innovations, and the convergence of technologies such as blockchain, artificial intelligence, cyber sec, virtual and augmented reality, and industrial Internet of things. Steinbeis International Network is a technology transfer company under the umbrella of a foundation based in Stuttgart, Germany, with more than 1,000 research and tech transfer centers in 60+ countries. Uwe has more than 25 years of work experience in founding, consulting, financing, and internationalizing companies, mainly in CEE and in media, real estate, and IT business. He is an author of several books and articles on entrepreneurship and business administration. Moreover, he is the Co-Founder and Chairman of the City of Blockchain, a joint initiative of more than 60 public, corporate, non-governmental, and private partners in Vienna, Austria and beyond, with a view to promote distributed ledger technologies mainly in the context of smart city agendas. Uwe holds a Master's degree in business administration and information systems.

Jingwen Yao is a User Experience Designer and Researcher who has an interest in designing for positive social impacts and improving livelihoods in underdeveloped regions. With an educational background in Industrial Design (MSc from Delft University of Technology), she is specialized in adopting Human-Centered Design Methodologies to different requests and circumstances. Be it by diving into local communities' lives in rural Uganda and Tanzania for designing a frugal medical thermometer and a honey processing system or traveling all around The Netherlands to interview financiers and entrepreneurs for investigating the possibilities of financing SMEs with blockchain technologies. In the past 10 years, Jingwen, who originally comes from Beijing, has worked on and studied various topics such as Social Innovations, Social Entrepreneurship, Sustainable Design, Blockchain, and Accounting Business in more than 5 countries across Asia, Europe, and Africa. Currently, she is based in The Netherlands, working at Exact Business Software as a User Experience Designer, while preparing for her one-year travel plan, where she wants to explore more social design opportunities and sustainable living styles.

Sample Chapter(s)
Chapter 1 - Blockchain Economic Theory: Digital Asset Contracting Reduces Debt and Risk