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Blockchain, Decentralized Consensus, and Trust

In: The Economics of Cryptocurrencies and Digital Money

Author

Listed:
  • Augusto Schianchi

    (Università di Parma)

  • Andrea Mantovi

    (Università di Parma)

Abstract

This chapter sets the stage for comparing the problems of trust raised by standard and new money instruments. The computer science of blockchain is summarized in a brief discussion of hashing, time-stamping digital documents and consensus. Our simplified approach to these highly sophisticated issues is meant to fit our economic perspective. The principle of “no questions asked” is taken as the foundation of monetary economics. The problem of safe assets and collateralization is acknowledged as the monetary problem of the millennium. The hierarchy of account-based money is discussed. Bank runs and financial stability as depicted by Diamond and Dybvig are given due emphasis. Finally, we compare the different problems of trust that blockchain solutions and monetary institutions are meant to face. An Appendix argues that classical debates in monetary thinking can have a firm grip on the current evolution of digital money.

Suggested Citation

  • Augusto Schianchi & Andrea Mantovi, 2023. "Blockchain, Decentralized Consensus, and Trust," Palgrave Studies in Financial Services Technology, in: The Economics of Cryptocurrencies and Digital Money, chapter 0, pages 31-65, Palgrave Macmillan.
    • Handle: RePEc:pal:psincp:978-3-031-44248-3_2
    DOI: 10.1007/978-3-031-44248-3_2
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