CRYPTOGRAPHY AS AN INSTITUTIONAL MECHANISM OF TRUST IN THE DIGITAL ECONOMY

The rapid digitalization of economic activities has made trust a critical resource, essential for efficient and secure market interactions. This study examines cryptography as an institutional mechanism of trust, analyzing how cryptographic protocols-including blockchain, smart contracts, encryption, and consensus algorithms-function as substitutes for or complements to traditional institutions such as banks and regulatory authorities. The paper is grounded in the framework of New Institutional Economics and transaction cost theory, and it explores the role of cryptography in reducing information asymmetries, mitigating opportunistic behavior, and enhancing transparency in digital transactions. The empirical analysis compares conventional financial systems with decentralized platforms, demonstrating that cryptographically based mechanisms reduce transaction costs, improve market efficiency, and strengthen institutional trust in environments characterized by weak or ineffective formal institutions. The findings suggest that cryptography is not merely a technical tool for data protection, but represents a new institutional paradigm that redefines trust relations and modes of market governance. The implications extend to regulatory frameworks, public policy design, and the future development of financial institutions in the digital economy.