Is Bitcoin a decentralized payment mechanism?

William Luther and Sean Stein Smith

Journal of Institutional Economics, 2020, vol. 16, issue 4, 433-444

Abstract: We make a distinction between centralized, decentralized, and distributed payment mechanisms. A centralized payment mechanism processes a transaction using a trusted third party. A decentralized payment mechanism processes a transaction between the parties to the transaction. A distributed payment mechanism relies on the network of users to process a transaction on a shared ledger. We maintain that bitcoin is neither a centralized nor a decentralized payment mechanism. It is, instead, a distributed payment mechanism. We then consider decentralized and centralized aspects of the broader bitcoin payment space.

Date: 2020
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