Entrepreneurial Exit: Developing the Cryptoeconomy

Book chapter published in Blockchain Economics: Implications of Distributed Ledgers – Markets, Communications Networks, And Algorithmic Reality

Abstract: Blockchain technology enables entrepreneurs to develop new decentralised governance structures to coordinate human interaction and exchange. That is, blockchain enables exit from political-socioeconomic systems through new forms of property rights protection and enforcement. This chapter examines the economic problem facing entrepreneurs as they use blockchain to cryptosecede and develop the new governance structures of the cryptoeconomy. The analysis draws on institutional and new development economics, arguing that blockchain entrepreneurs face a private economic development problem over complementary ‘protective-tier’ institutional technologies (Leeson and Boettke 2009). This understanding of the parallels between territorial economic development and the cryptoeconomy development helps explain collaboration between blockchain entrepreneurs within governance structures such as hackathons and conferences (Allen 2017). These collaborative governance structures are entrepreneurial efforts of self-governed economic development of the cryptoeconomy.

Red Tape Reduction: A New Approach

Book chapter published in Australia’s Red Tape Crisis: The Causes and Costs of Over-Regulation

Abstract: Policymakers pursuing regulatory reform can take one of two complementary paths: first, identifying and repealing specific regulatory instruments or sectors; or second, through placing institutional constraints on the regulatory process itself. This paper reviews the political economy of these two paths in Australia before focusing on the latter path, of red tape reduction policies and procedures. Developing effective red tape policies and procedures relies on the quantification and measurement of the red tape burden so that success or failure can be benchmarked. Finally this paper introduces a new approach to measuring regulatory burden—counting the number of restrictive clauses as applied in British Columbia—as the potential future of red tape mechanisms in Australia.

Regulation and Technological Change

Book chapter published in Australia’s Red Tape Crisis: The Causes and Costs of Over-Regulation (with Chris Berg)

Abstract: Blockchain technology enables entrepreneurs to develop new decentralised governance structures to coordinate human interaction and exchange. That is, blockchain enables exit from political-socioeconomic systems through new forms of property rights protection and enforcement. This chapter examines the economic problem facing entrepreneurs as they use blockchain to cryptosecede and develop the new governance structures of the cryptoeconomy. The analysis draws on institutional and new development economics, arguing that blockchain entrepreneurs face a private economic development problem over complementary ‘protective-tier’ institutional technologies (Leeson and Boettke 2009). This understanding of the parallels between territorial economic development and the cryptoeconomy development helps explain collaboration between blockchain entrepreneurs within governance structures such as hackathons and conferences (Allen 2017). These collaborative governance structures are entrepreneurial efforts of self-governed economic development of the cryptoeconomy.

Blockchains and the boundaries of self-organized economies: predictions for the future of banking

Book chapter published in Banking Beyond Banks and Money

Abstract: This chapter uses economic theory to explore the implications of the blockchain technology on the future of banking. We apply an economic analysis of blockchains based on both new institutional economics and public choice economics. Our main focus is on the economics of why banks exist as organizations (rather than a world in which all financial transactions occurring in markets), and how banks are then impacted by technological change that affects transaction costs. Our core argument is that blockchains are more than just a new technology to be applied by banks, but rather compete with banks as organizations, enabling banking transactions to shift out of centralized hierarchical organizations and back into decentralized markets. Blockchains are a new institutional technology — because of how they affect transaction costs in financial markets — that will fundamentally re-order the governance of the production of banking services. We then explore this implication through broader political economy lens in which banking moves out of organizations and deeper into markets. We examine this as a form of institutional economic evolution in which the boundary of catallaxy — i.e., a self-organized economy — is enlarged, at the margin of the banking sector. Such institutional competition enables evolutionary discovery in the institutions of banking.