Cryptonetworks and the Theory of the Firm
Qiao Wang - October 4, 2018
If Austrian economics is the theoretical foundation for Bitcoin, I think Ronald Coase is the inspiration for general cryptonetworks.
In 1937, Coase wrote a seminal paper titled “The Nature of the Firm”. It laid the groundwork for a whole new branch of microeconomics, called the theory of the firm, and won the 1991 Nobel Prize.
The mark of geniuses, in social sciences at least, is their ability to uncover important hidden truths that are so self-evident in hindsight. And Coase is one of these geniuses.
In a typical fashion, he asked a simple question that was of no interest to most economists before him: if markets are so good at allocating resources, why do firms exist? After all, markets are one of the most worshiped concepts since Adam Smith, and rightly so.
It was the process of answering this question that unveiled vitally important insights that never occurred to the world.