Blockchain Economics for Investment Professionals

Abstract

The author reviews recent studies on blockchains, cryptocurrencies, and initial coin offerings (ICOs), and discusses their implications for institutional investors. The research on blockchain technology is organized into two broad categories: those with the economics of decentralized ledger technologies and those studying their impacts on the real economy. The author first clarifies the core functionalities of blockchains and then elaborates on issues concerning information distribution in generating decentralized consensus, industrial organization of mining pools, the role and dynamic pricing of crypto-tokens, and auditing with a federated blockchain.