Bitcoin provides its users with transaction-processing services which are similar to those of traditional payment systems. This paper models the novel economic structure implied by Bitcoin's innovative decentralized design, which allows the payment system to be reliably operated by unrelated...

Owned by nobody and controlled by an almost immutable protocol the Bitcoin payment system is a platform with two main constituencies: users and profit seeking miners who maintain the system's infrastructure. The paper seeks to understand the economics of the system: How does the system raise...