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Bitcoin and Beyond

Author

Listed:
  • Kose John

    (Stern School of Business, New York University, New York, NY, USA)

  • Maureen O'Hara

    (Johnson College of Business, Cornell University, Ithaca, New York, USA)

  • Fahad Saleh

    (School of Business, Wake Forest University, Winston-Salem, North Carolina, USA)

Abstract

We survey extant literature on the economics of blockchain fundamentals, with particular focus on Bitcoin, proof-of-work, and proof-of-stake. We formally clarify Bitcoin's economic significance in solving the double-spending problem without a centralized entity. We then transition to the economics literature, highlighting the key endogenous economic interactions among participants in the Bitcoin ecosystem as well as the economics of proof-of-stake and other potential consensus algorithms. Along the way, we discuss various literature that provides important insights regarding fees, forks, and price volatility. We conclude by reflecting on the next generation of blockchain innovations.

Suggested Citation

  • Kose John & Maureen O'Hara & Fahad Saleh, 2022. "Bitcoin and Beyond," Annual Review of Financial Economics, Annual Reviews, vol. 14(1), pages 95-115, November.
    • Handle: RePEc:anr:refeco:v:14:y:2022:p:95-115
    DOI: 10.1146/annurev-financial-111620-011240
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    More about this item

    Keywords

    Bitcoin; blockchain; fees; PoS; PoW; proof-of-stake; proof-of-work;
    All these keywords.

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • G00 - Financial Economics - - General - - - General

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