Why decentralized blockchains are inapplicable
In practice, blockchain is nothing more than a glorified spreadsheet. But it has also become the byword for a libertarian ideology that treats all governments, central banks, traditional financial institutions, and real-world currencies as evil concentrations of power that must be destroyed. Blockchain fundamentalists’ ideal world is one in which all economic activity and human interactions are subject to anarchist or libertarian decentralization. They would like the entirety of social and political life to end up on public ledgers that are supposedly “permissionless” (accessible to everyone) and “trustless” (not reliant on a credible intermediary such as a bank).
The Big Blockchain Lie
By: Nouriel Roubini – New York University
Welfare gains from using blockchain
Centralized intermediaries, argue Abadi and Brunnermeier, operate their ledgers in such a way as to maximize profits thus distorting the incentives of the ledgers’ users and imposing economic costs. These intermediaries usually have a monopoly on the information written on the ledger, preventing their rents from simply being competed away.
By contrast, we find that a blockchain is beneficial to readers because of a synergy between replicability of information and competition among writers. Given that information can be replicated across ledgers, readers’ stakes in the system no longer anchor them to the established ledger. […] which is especially welfare-improving when network externalities are strong.
Blockchain Economics
Authors: Joseph Abadi and Markus Brunnermeier
From: Princeton University
