Arbeitspapier
Monopoly without a monopolist: An economic analysis of the bitcoin payment system
Owned by nobody and controlled by an almost immutable protocol the Bitcoin payment system is a platform with two main constituencies: users and profit seeking miners who maintain the system's infrastructure. The paper seeks to understand the economics of the system: How does the system raise revenue to pay for its infrastructure? How are usage fees determined? How much infrastructure is deployed? What are the implications of changing parameters in the protocol? A simplified economic model that captures the system's properties answers these questions. Transaction fees and infrastructure level are determined in an equilibrium of a congestion queueing game derived from the system's limited throughput. The system eliminates dead-weight loss from monopoly, but introduces other inefficiencies and requires congestion to raise revenue and fund infrastructure. We explore the future potential of such systems and provide design suggestions.
- ISBN
-
978-952-323-186-3
- Language
-
Englisch
- Bibliographic citation
-
Series: Bank of Finland Research Discussion Papers ; No. 27/2017
- Classification
-
Wirtschaft
Market Structure, Pricing, and Design: General
Production and Organizations: General
Market Structure, Firm Strategy, and Market Performance: General
Regulation and Industrial Policy: General
- Event
-
Geistige Schöpfung
- (who)
-
Huberman, Gur
Leshno, Jacob D.
Moallemi, Ciamac
- Event
-
Veröffentlichung
- (who)
-
Bank of Finland
- (where)
-
Helsinki
- (when)
-
2017
- Handle
- Last update
-
10.03.2025, 11:44 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Huberman, Gur
- Leshno, Jacob D.
- Moallemi, Ciamac
- Bank of Finland
Time of origin
- 2017
Other Objects (12)
Simulation analyses and stress testing of payment networks
Competition and regulation in European retail payment systems
Re-engineering payment systems for the E-world
The mixed oligopoly of cross-border payment systems
Less cash on the counter: forecasting Finnish payment preferences
Integrating European retail payment systems: some economics of SEPA
Assessing effects of price regulation in retail payment systems
Systemic risk in the Finnish payment system: An empirical investigation
Large value payment systems: principles and present and future developments
Risk sharing in the pricing of payment services by banks
Simulation studies of liquidity needs, risks and efficiency in payment networks: Proceedings from the Bank of Finland Payment and Settlement System Seminars 2005-2006
Developing the interbank payment system: Efficiency of public versus private investments
Simulation analyses and stress testing of payment networks
Competition and regulation in European retail payment systems
Re-engineering payment systems for the E-world
The mixed oligopoly of cross-border payment systems
Less cash on the counter: forecasting Finnish payment preferences
Integrating European retail payment systems: some economics of SEPA
Assessing effects of price regulation in retail payment systems
Systemic risk in the Finnish payment system: An empirical investigation
Large value payment systems: principles and present and future developments
Risk sharing in the pricing of payment services by banks
Simulation studies of liquidity needs, risks and efficiency in payment networks: Proceedings from the Bank of Finland Payment and Settlement System Seminars 2005-2006
Developing the interbank payment system: Efficiency of public versus private investments
Simulation analyses and stress testing of payment networks
Competition and regulation in European retail payment systems
Re-engineering payment systems for the E-world
The mixed oligopoly of cross-border payment systems
Less cash on the counter: forecasting Finnish payment preferences
Integrating European retail payment systems: some economics of SEPA
Assessing effects of price regulation in retail payment systems
Systemic risk in the Finnish payment system: An empirical investigation
Large value payment systems: principles and present and future developments
Risk sharing in the pricing of payment services by banks
Simulation studies of liquidity needs, risks and efficiency in payment networks: Proceedings from the Bank of Finland Payment and Settlement System Seminars 2005-2006