Blockchain Disruption and Smart Contracts

By Lin William Cong, Zhiguo He. The Review of financial studies, 2018

1,032 citations recorded by the source corpus.

Blockchain technology provides decentralized consensus and potentially enlarges the contracting space using smart contracts with tamper-proofness and algorithmic executions. Meanwhile, generating decentralized consensus entails distributing information which necessarily alters the informational environment. We analyze how decentralization affects consensus effectiveness, and how the quintessential features of blockchain reshape industrial organization and the landscape of competition. Smart contracts can mitigate informational asymmetry and improve welfare and consumer surplus through enhanced entry and competition, yet the irreducible distribution of information during consensus generation may encourage greater collusion. In general, blockchains can sustain market equilibria with a wider range of economic outcomes. We further discuss anti-trust policy implications targeted to blockchain applications, such as separating consensus record-keepers from users.

Subfields: Information Systems, Management Information Systems, Management Science and Operations Research

View Paper: https://www.semanticscholar.org/paper/beeb704c6de6437eef7f5aee5a611c0b60fa7f9f

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In Information Systems

In Management Information Systems

In Management Science and Operations Research

Citations in the corpus

On the Financing Benefits of Supply Chain Transparency and Blockchain Adoption (2020, neutral): “Other releavant studies include Halaburda (2018), Cong, Li and Wang (2018), Cong and He (2019).”
From mining to markets: The evolution of bitcoin transaction fees (2019, background): “Still other research (see Cong and He (2017); FINRA (2017)) examines smart securities and more general uses of the blockchain.”
Fintech and banking: What do we know? (2019, neutral): “68 See Cong and He (2019) for a discussion of the economics of smart contracts.”
Blockchain without Waste: Proof-of-Stake (2020, neutral): “Some computer science papers such as Eyal and Sirer (2014) and Nayak, Kumar, Miller, and Shi (2015) explicitly consider incentives but do not analyze equilibrium outcomes.”
How Blockchain can impact financial services – The overview, challenges and recommendations from expert interviewees (2020, methodology): “…a Japanese exchange noted a theft of half a billion dollars of cryptocurrency in 2018 (Werbach, 2018) Although Blockchain technology has shown irreplaceable practic-ability and uniqueness in the capital market, its immature technology status is still a challenge to regulators (Cong and He, 2019).”
Blockchain Adoption for Combating Deceptive Counterfeits (2018, background): “…papers that examine how blockchain is used in various business contexts, such as settlement for asset trading (Chiu and Koeppl 2019), trade-ﬁ-nance (Cong and He 2019), scientiﬁc misconduct mitigation (Mohan 2019), institutional entrepreneurship (Allen et al. 2020), and platform governance (Chen et…”
Open Banking: Credit Market Competition When Borrowers Own the Data (2020, neutral): “For related work on this topic, see Abadi and Brunnermeier (2018) , Biais et al. (2019) , and Cong and He (2019) .”