*Just published* w/ @coinmetrics
Bitcoin: A Novel Economic Institution
ark-invest.com/white-papers/b…
centrally controlled institutions that enforce the rules, record-keeping, and adjudication of the system.
economic activity. Ex: Central banks govern monetary policy, while commercial banks custody and manage assets, and centralized payment processors mediate consumer transactions.
institution. Rules enforced from the top down are guaranteed if those in control are trustworthy.
Assurance 1: Value should be exchanged globally and freely.
Why the trust-based model fails to meet Assurance 1: Centralized parties determine the eligibility of participants and control the flow of capital.
Why the trust-based model fails to meet Assurance 2: Participants rely on a local enforcer to grant property rights and protect property.
Why the trust-based model fails to meet Assurance 3:
Centrally controlled institutions can enforce and change rules arbitrarily.
Why the trust-based model fails to meet Assurance 4:
Centrally controlled institutions lack transparency and auditability.
Assurance 1: Value should be exchanged globally and freely.
Why Bitcoin Satisfies Assurance 1:
Bitcoin users can send any amount of value anytime to anyone anywhere.
Why Bitcoin Satisfies Assurance 2:
Bitcoin has an embedded independent property system.
Why Bitcoin Satisfies Assurance 3:
Bitcoin incorporates a unique system of checks and balances to maintain integrity.
Why Bitcoin Satisfies Assurance 4:
Bitcoin embeds native verification tools.
predictable financial system.
Stay tuned for Part 2, where @coinmetrics & I analyze bitcoin as an investment. While many investors question its merit, in our view bitcoin is the most compelling monetary asset to emerge since gold