Irving Fisher, Ronald Coase, and DeFi Online publication date: Thu, 26-Jan-2023
by Frank Lorne; Adam Aldad
International Journal of Electronic Banking (IJEBANK), Vol. 3, No. 4, 2022
Abstract: The crypto world promises all peer-to-peer transactions disconnected from government regulations. Movement to decentralise financial institutions (DeFi), via blockchain technology, was underpinned by a belief of using smart contracts. Finance encompasses all transactions between Today Goods and tomorrow goods (TDTM). This trading world is currently under construction. According to Fisher, trading with future entails fundamental TDTM principles. According to Coase, all contracts are subjected to transaction costs. The success of DeFi ultimately must answer to how transaction costs are lowered in TDTM. The 2020 world pandemic fuelled crypto activities. If crypto can live up to its promise for reducing transaction costs, a fiat world inflation is actually a crypto world deflation. Existing real investment in the crypto world can increase or decrease the marginal product of capital, DeFi Rate is different from the real interest rate. This article interprets the findings in the framework of Fisher and Coase.
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