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Cryptography Versus Incentives

In: The Economics of Blockchain Consensus

Author

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  • Joshua Gans

    (University of Toronto)

Abstract

This chapter explores the trade-off between using cryptography and incentives in blockchain systems, particularly in the context of smart contracts. Cryptography provides security and permissions, but can limit contract offerings and increase computational costs. Incentives encourage positive behavior, but require access to hidden information. By examining the example of front-running in blockchains with smart contracting layers, the chapter highlights the distinct solutions provided by cryptography and incentives. Ultimately, striking a balance between these two approaches is crucial for ensuring efficient and secure blockchain operations.

Suggested Citation

  • Joshua Gans, 2023. "Cryptography Versus Incentives," Springer Books, in: The Economics of Blockchain Consensus, chapter 0, pages 85-101, Springer.
    • Handle: RePEc:spr:sprchp:978-3-031-33083-4_6
    DOI: 10.1007/978-3-031-33083-4_6
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    Cited by:

    1. Andrea Canidio & Vincent Danos, 2023. "Commitment Against Front-Running Attacks," Post-Print hal-04310293, HAL.

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