[Theory] 5/6 TTIC Colloquium: Jacob Leshno, University of Chicago

[Mary Marre]

*When:    *  Monday, May 6th at *11:00 am*



*Where:     *TTIC, 6045 S. Kenwood Avenue, 5th Floor, Room 526



*Who:        *Jacob Leshno, University of Chicago


*Title:   *     An Economic Analysis of the Bitcoin Payment System

*Abstract:*
Unlike traditional payment systems, Bitcoin has no owner and is governed by
a computer protocol. We model Bitcoin as a platform that intermediates
between users and computer servers (“miners”) which operate the Bitcoin
payment system (BPS), and study the novel market design of this owner-less
platform. We find that the BPS can eliminate inefficiencies due to market
power, but incurs other costs. Having fixed transaction processing
capacity, the BPS experiences service delays which motivate users to pay
for service priority. Free entry implies that miners cannot profitably
affect the level of fees paid by users. The paper derives closed form
formulas of the fees and waiting times and studies their properties;
compares pricing under the BPS to that under a traditional payment system
operated by a profit maximizing firm; and suggests protocol design
modification to enhance the platform’s efficiency.

*(joint with Gur Huberman and CIamac Moallemi) *

*Host:* Avrim Blum <avrim at ttic.edu>


For more information on the colloquium series or to subscribe to the
mailing list,please see http://www.ttic.edu/colloquium.php



Mary C. Marre
Administrative Assistant
*Toyota Technological Institute*
*6045 S. Kenwood Avenue*
*Room 517*
*Chicago, IL  60637*
*p:(773) 834-1757*
*f: (773) 357-6970*
*mmarre at ttic.edu <mmarre at ttic.edu>*
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