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Will Blockchain Be a Big Deal? Reasons for Caution

Will Blockchain Be a Big Deal? Reasons for Caution The initial enthusiasm for implementing blockchain in financial markets has been dampened considerably by its collision with economic realities. Though the author warns against avoiding the Panglossian trap of viewing ours as the best of all possible worlds, he reminds us that trusted institutions have evolved and emerged in a competitive environment as a means of economizing on transaction costs. Such costs arise from the nature of transactions, including crucially the information environment in which they take place. Though new technologies such as blockchain have the potential to reduce some of these costs, they often do so without fundamentally changing the underlying economic conditions that give rise to them. And as a result, institutions such as banks and exchanges that technologists scoff at may well prove surprisingly competitive and durable in the face of technological challengers. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Applied Corporate Finance Wiley

Will Blockchain Be a Big Deal? Reasons for Caution

Journal of Applied Corporate Finance , Volume 31 (4) – Dec 1, 2019

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References (3)

Publisher
Wiley
Copyright
Copyright © 2019 Cantillon and Mann
ISSN
1078-1196
eISSN
1745-6622
DOI
10.1111/jacf.12379
Publisher site
See Article on Publisher Site

Abstract

The initial enthusiasm for implementing blockchain in financial markets has been dampened considerably by its collision with economic realities. Though the author warns against avoiding the Panglossian trap of viewing ours as the best of all possible worlds, he reminds us that trusted institutions have evolved and emerged in a competitive environment as a means of economizing on transaction costs. Such costs arise from the nature of transactions, including crucially the information environment in which they take place. Though new technologies such as blockchain have the potential to reduce some of these costs, they often do so without fundamentally changing the underlying economic conditions that give rise to them. And as a result, institutions such as banks and exchanges that technologists scoff at may well prove surprisingly competitive and durable in the face of technological challengers.

Journal

Journal of Applied Corporate FinanceWiley

Published: Dec 1, 2019

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