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What can blockchain do and cannot do?

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  • Zhong Xu
  • Chuanwei Zou

Abstract

This paper studies the economic functions of blockchain. First, by explaining blockchain technologies from an economic perspective, it introduces the Token Paradigm to summarize mainstream blockchain systems, discusses the true meanings of consensus and trustlessness in the blockchain field, and analyzes the functions of smart contracts. Next, it categorizes major blockchain applications according to how they use tokens and discusses relevant economic problems such as tokens’ monetary features, tokens’ impacts on blockchain platforms, blockchain’s governance functions, and the efficiency and security of blockchain systems. Finally, it discusses the concept of Blockchain as a Financial Infrastructure (BaaFI), which is represented by central bank digital currencies (CBDC) and global stable coins.

Suggested Citation

  • Zhong Xu & Chuanwei Zou, 2021. "What can blockchain do and cannot do?," China Economic Journal, Taylor & Francis Journals, vol. 14(1), pages 4-25, January.
    • Handle: RePEc:taf:rcejxx:v:14:y:2021:i:1:p:4-25
    DOI: 10.1080/17538963.2020.1748968
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    References listed on IDEAS

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    Cited by:

    1. Medina Ayta Mohammed & Carmen De-Pablos-Heredero & José Luis Montes Botella, 2025. "Mapping the transformative realm of blockchain-enabled central bank digital currencies: a bibliometric analysis," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 15(1), pages 53-88, March.
    2. Yonggen Luo & Miaomiao Fang & Antai Li & Shiqiang Chen, 2024. "Opportunity or opportunism? Blockchain technology adoption and corporate default risk," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-14, December.
    3. Gupta, Somya & Pandey, Dharen Kumar & El Ammari, Anis & Sahu, Ganesh P., 2023. "Do perceived risks and benefits impact trust and willingness to adopt CBDCs?," Research in International Business and Finance, Elsevier, vol. 66(C).

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