Skip to main content

Blockchains and the economic institutions of capitalism


Blockchains are a new digital technology that combines peer-to-peer network computing and cryptography to create an immutable decentralised public ledger. Where the ledger records money, a blockchain is a cryptocurrency, such as Bitcoin; but ledger entries can record any data structure, including property titles, identity and certification, contracts, and so on. We argue that the economics of blockchains extend beyond analysis of a new general purpose technology and its disruptive Schumpeterian consequences to the broader idea that blockchains are an institutional technology. We consider several examples of blockchain-based economic coordination and governance. We claim that blockchains are an instance of institutional evolution.

Corresponding author
Hide All
Abramowicz, M. (2016) ‘Cryptocurrency-based law’, Arizona Law Review, 58 (2): 359420.
Alchian, A. (1983) ‘Reminiscences of errors’, in Benjamin, D. (ed.) Collected Works of Armen A. Alchian, Vol. 2. Liberty Fund, Indianapolis.
Alchian, A. and Demsetz, H. (1972) ‘Production, information costs, and economic organisation’, American Economic Review, 62 (5): 777–95.
Allen, D. (2011) The Institutional Revolution. University of Chicago Press, Chicago, IL.
Allen, D. (2016) ‘Discovering and developing the blockchain cryptoeconomy’, available at (accessed 30 April 2017).
Allen and Overy (2016) ‘Decentralized autonomous organizations’, available at (accessed 30 April 2017).
Atzori, M. (2015) ‘Blockchain technology and decentralized governance: is the state still necessary?’ Available at (accessed 30 April 2017).
Böhme, R., Christin, N., Edelman, B. and Moore, T. (2015) ‘Bitcoin: economics, technology, governance’, Journal of Economic Perspectives, 29 (2): 213–38.
Bresnahan, T. and Trajtenberg, M. (1995) ‘General purpose technologies: engines of growth?’ Journal of Econometrics, 65 (1): 83108.
Buterin, V. (2014a) ‘DAOs, DACs, DAS and more: an incomplete terminology guide’, available at Ethereum blog,
Buterin, V. (2014b) ‘Ethereum Whitepaper: A next generation smart contract and decentralized application platform’, available at (accessed 30 April 2017).
Buterin, V. (2015) ‘Visions Part I: The value of blockchain technology’, available at (accessed 30 April 2017).
Catalini, C. and Gans, J. (2016) ‘Some simple economics of the blockchain’, available at (accessed 30 April 2017).
Catalini, C. and Tucker, C. (2016) ‘Seeding the S-curve: The role of early adopters in diffusion’, available at (accessed 30 April 2017).
Coase, R. (1937) ‘The nature of the firm’, Economica, 4 (16): 386405.
Coase, R. (1960) ‘The problem of social cost’, Journal of Law and Economics, 3: 144.
De Filippi, P. (2015) ‘Blockchain-based crowd-funding: what impact on artistic production and arts consumption?’ Available at (accessed 30 April 2017).
De Filippi, P. and Mauro, R. (2014) ‘Ethereum: the decentralised platform that might disrupt today's institutions’, Internet Policy Review 3 (2), available at (accessed 30 April 2017).
De Long, J. (1991) ‘Did J. P. Morgan's men add value? An economist's perspective on financial capitalism’, in Klein, D. (1997), Reputation. University of Michigan Press, Ann Arbor, MI.
Evans, D. (2014) ‘Economic aspects of Bitcoin and other decentralised public-ledger currency platforms’, working paper #68, Coase-Sandor Institute for Law and Economics, University of Chicago, IL.
Hart, O. (1989) ‘An economists perspective on the theory of the firm’, Columbia Law Review, 89 (7): 1757–74.
Hart, O. and Moore, J., (1990) ‘Property rights and the nature of the firm’, Journal of Political Economy, 98 (6): 1119–58.
Hayek, F. A. (1945) ‘The use of knowledge in society’, American Economic Review, 35 (4): 519–30.
Hodgson, G. (2004) ‘Opportunism is not the only reason why firms exist: why an explanatory emphasis on opportunism may mislead management strategy’, Industrial and Corporate Change, 13 (2): 401–18.
Hodgson, G. (1998) ‘The approach of institutional economics’, Journal of Economic Literature, 36 (1): 166–92.
Hodgson, G. (2015) Conceptualizing Capitalism. University of Chicago Press, Chicago, IL.
Hodgson, G. and Knudsen, T. (2010) Darwin's Conjecture. University of Chicago Press, Chicago, IL.
Jensen, M. and Meckling, W. (1976) ‘Theory of the firm: managerial behavior, agency costs and ownership structure’, Journal of Financial Economics, 3 (4): 305–60.
Klein, B. and Leffler, K. (1981) ‘The role of market forces in assuring contractual performance’, in Klein, D. (1997) Reputation. University of Michigan Press, Ann Arbor.
Klein, D. (ed) (1997) Reputation. University of Michigan Press, Ann Arbor.
Langlois, R. (1995) ‘Capabilities and coherence in firms and markets’, in Montgomery, C. (ed.) Resource-based and Evolutionary Theories of the Firm. Kluwer, Boston, MA, pp. 71100.
Larimer, D., Scott, N., Zavgorodnev, V., Johnson, B., Calfee, J. and Vandeberg, M. (2016) ‘Steem: An incentivised blockchain-based social media platform’, available at (accessed 30 April 2017).
Lipsey, R., Carlaw, K. and Bekhar, C. (2005) Economic Transformations. Oxford University Press, Oxford.
Mills, D., Wang, K., Malone, B., Ravi, A., Marquardt, J., Chen, C., Badev, A., Brezinski, T., Fahy, L., Liao, K., Kargenian, V., Ellithorpe, M., Ng, W. and Baird, M. (2016) ‘Distributed ledger technology in payments, clearing, and settlement’, Board of Governors of the Federal Reserve System, Washington, available at (accessed 30 April 2017).
Nakamoto, S. (2008) ‘Bitcoin: A peer-to-peer electronic cash system’, available at (accessed 30 April 2017).
Narayanan, A., Bonneau, J., Felton, E., Miller, A. and Goldfeder, S. (2016) Bitcoin and Cryptocurrency Technologies. Princeton University Press, Princeton, NJ.
Nelson, R. and Sampat, B. (2001) ‘Making sense of institutions as a factor shaping economic performance’, Journal of Economic Behavior and Organisation, 44 (1): 3154.
Nooteboom, B. (2002) Trust. Edward Elgar, Cheltenham.
North, D. (1990) Institutions, Institutional Change, and Economic Performance. Cambridge University Press, Cambridge, MA.
Nussbaum, F. (1933) A History of the Economic Institutions of Modern Europe. Crofts, New York.
Olson, M. (1993) ‘Dictatorship, democracy and development’, American Political Science Review, 87 (3): 567–76.
Ostrom, E. (1990) Governing the Commons. Cambridge University Press, New York.
Ostrom, E. (2005) Understanding Institutional Diversity. Princeton University Press, Princeton, NJ.
Perez, C. (2009) ‘Technological revolutions and techno-economic paradigms’, Cambridge Journal of Economics, 34 (1): 185202.
Pilkington, M. (2016) ‘Blockchain technology: Principles and applications’, in Olleros, F. and Zhegu, M. (eds) Research Handbook on Digital Transformations. Edward Elgar, Cheltenham.
Reijers, W., O'Brolchain, F. and Haynes, P. (2016) ‘Governance in blockchain technologies and social contract theories’, Ledger, 1 (1): 134–51.
Schotter, A. (2008) The Economic Theory of Social Institutions. Cambridge University Press, Cambridge.
Scott, J. (1998) Seeing Like a State. Yale University Press, New Haven, CT.
Stringham, E. (2015) Private Governance. Oxford University Press, Oxford.
Swan, M. (2015) Blockchain. O'Reilly Media, Sebastopol, CA.
Swanson, T. (2014) Great Chain of Numbers. Creative Commons, available at (accessed 30 April 2017).
Tapscott, D. and Tapscott, A. (2016) Blockchain Revolution. Penguin, New York.
Tirole, J. (1999) ‘Incomplete contracts: where do we stand?’ Econometrica, 67 (4): 741–81.
Walport, M. [Chief Scientific Officer] (2016) ‘Distributed ledger technology: beyond blockchain’, Government Office for Science, London.
White, L. (2015) ‘The market for cryptocurrencies’, Cato Journal, 35 (2): 383402.
Williamson, O. (1979) ‘Transaction cost economics: the governance of contractual relations’, Journal of Law and Economics, 22 (2): 233–61.
Williamson, O. (1985) The Economic Institutions of Capitalism. Free Press, New York.
Williamson, O. (1991) ‘Comparative economic organisation: the analysis of discrete structural alternatives’, Administrative Science Quarterly, 36 (2): 269–96.
Wood, G. (2014a) ‘DApps: what Web 3.0 looks like’, available at, and (accessed 30 April 2017).
Wood, G. (2014b) ‘What is Web 3.0?’, available at (accessed 30 April 2017).
Wood, G. (2014c) ‘Ethereum: a secure decentralized generalized transaction ledger’, available at (accessed 30 April 2017).
Wright, A. and de Filippi, P. (2015) ‘Decentralized blockchain technology and the rise of lex cryptographia’, available at (accessed 30 April 2017).
Yamey, B. (1949) ‘Scientific bookkeeping and the rise of capitalism’, Economic History Review 1 (2/3): 99121.
Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

Journal of Institutional Economics
  • ISSN: 1744-1374
  • EISSN: 1744-1382
  • URL: /core/journals/journal-of-institutional-economics
Please enter your name
Please enter a valid email address
Who would you like to send this to? *


Altmetric attention score

Full text views

Total number of HTML views: 0
Total number of PDF views: 0 *
Loading metrics...

Abstract views

Total abstract views: 0 *
Loading metrics...

* Views captured on Cambridge Core between <date>. This data will be updated every 24 hours.

Usage data cannot currently be displayed