Market Power and the Bitcoin Protocol
A talk in the Economics Speaker Series by Dr. Alfred Lehar (PhD) of the University of Calgary
Date: Friday, Sept. 26
Time: 3:30 pm
Location: Arts Building Room 109, 9 Campus Dr., Saskatoon
Free and open to the public
About this event
Guest speaker: Dr. Alfred Lehar (PhD), Professor, Haskayne School of Business, University of Calgary
A talk in the Economics Speaker Series hosted by the Department of Economics
We document that blocks on the blockchain are rarely filled to capacity, even though there is excess demand for block space by fee-paying users who want their transactions to be recorded. In spite of this, higher fee orders are not always prioritized. We show these patterns are consistent with miners exercising market power: If users believe that only high Fee transactions will be executed expeditiously we show how strategic capacity management can be used to extract higher fee revenue. Using a novel data set, we provide evidence consistent with this market power, and estimate that mining pools have extracted least 300 million USD a year in excess fees by making processing capacity artificially scarce.
Info: economics.dept@usask.ca
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