Decentralised forms of money face “irreducible” costs that mean they always tend to fragment, says Hyun Song Shin, head of the Bank for International Settlements’ monetary and economic department, in new research.

Shin’s working paper, published by the BIS on March 10, outlines a formal economic model of blockchain consensus, based on game theory. The paper shows how blockchain-based payment systems face a “core co-ordination problem”: the entities that validate payments must be sufficiently