Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/247258 
Year of Publication: 
2021
Series/Report no.: 
Working Paper No. 21.01
Publisher: 
Swiss National Bank, Study Center Gerzensee, Gerzensee
Abstract: 
Blockchain technology breathes new life into the classical analysis of money as a substitute for a ledger of all past transactions. While it involves updating the ledger through a decentralized consensus on the unique truth, the robustness of the equilibrium that supports this consensus depends on who has access to the ledger and how it can be updated. Using a global game analysis of an exchange economy with credit, we solve for the optimal ledger design that balances security, scalability and decentralization. When intertemporal incentives are strong, a centralized ledger is always optimal. Otherwise, decentralization may be optimal.
Subjects: 
market design
money
distributed ledger technology
DLT
blockchain
decentralized finance
global game
consensus
JEL: 
C72
C73
D4
E42
G2
L86
Document Type: 
Working Paper

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