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The use of logic circuits to classify blockchains

Author

Listed:
  • Carlo Gola

    (Bank of Italy)

  • Patrizio Fiorenza

    (Bank of Italy)

  • Federica Laurino

    (Bank of Italy)

  • Lorenzo Lesina

    (Bank of Italy)

Abstract

The work provides a method to classify blockchains and computing systems based on distributed ledger technology (DLT) and facilitate their comparison. In fact, DLTs are difficult to compare since they adopt different technological configurations, distinguished by the activities they perform and their technical characteristics and governance structures. Furthermore, some DLTs combine traditional decision-making processes with automated organizational procedures, while others adopt entirely algorithmic governance. The paper describes the main characteristics of DLTs: the degree of decentralization, the type of consensus protocol, the updating system, the governance structure, and the possibility of splitting the register (forking). The work uses the theory of switching circuits to visually represent and compare different DLTs based on their characteristics. This methodology is applied to Ethereum and Polkadot, two particularly complex DLTs.

Suggested Citation

  • Carlo Gola & Patrizio Fiorenza & Federica Laurino & Lorenzo Lesina, 2023. "The use of logic circuits to classify blockchains," Questioni di Economia e Finanza (Occasional Papers) 774, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:opques:qef_774_23
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    File URL: https://www.bancaditalia.it/pubblicazioni/qef/2023-0774/QEF_774_23.pdf
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    More about this item

    Keywords

    blockchain; DLT; cripto-asset; decentralised finance; banking and financial supervision;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • M4 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • M4 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting
    • M15 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - IT Management
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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