Institutional Cryptoeconomics

Cryptographically secured distributed ledger technology is one of the most innovative new technologies of the 21st century. While still closely associated with cryptocurrencies, such as Bitcoin, the underlying technology is widely seen as a new general-purpose information technology whose disruptive effect already extends beyond digital money to a broad range of economic and government activities that rely on consensus of a database of transactions or records. Yet it is so much more than that. Distributed ledger technology adds an additional category to the suite of Williamson’s (1985) “economic institutions of capitalism” – namely, markets, hierarchies and relational contracting – with a new type of economic order. We are very likely to observe a new form of business organisation emerging in the coming years that suppresses opportunism at important margins and self-monitors.