Bitcoin and the Rise of Decentralized Autonomous Organizations

Journal of Organization Design, Forthcoming

15 Pages Posted: 11 Dec 2017 Last revised: 30 Aug 2018

See all articles by Ying-Ying Hsieh

Ying-Ying Hsieh

Imperial College Business School

Jean-Philippe Vergne

Western University - Ivey Business School

Date Written: December 5, 2017

Abstract

Bitcoin represents the first real-world implementation of a “decentralized autonomous organization” (DAO) and offers a new paradigm for organization design. Imagine working for a global business organization whose routine tasks are powered by a software protocol instead of being governed by managers and employees. Task assignments and rewards are randomized by the algorithm. Information is not channeled through a hierarchy but recorded transparently and securely on an immutable public ledger called “blockchain”. Further, the organization decides on design and strategy changes through a democratic voting process involving a previously unseen class of stakeholders called “miners”. Agreements need to be reached at the organizational level for any proposed protocol changes to be approved and activated.

How do DAOs solve the universal problem of organizing with such novel solutions? What are the implications? We use Bitcoin as an example to shed light on how a DAO works in the cryptocurrency industry, where it provides a peer-to-peer, decentralized and disintermediated payment system that can compete against traditional financial institutions. We also invite commentaries from renowned organization scholars to share their views on this intriguing phenomenon.

Keywords: Bitcoin, cryptocurrency, decentralized autonomous organization, blockchain, consensus mechanisms, new forms of organizing, organizational forms

JEL Classification: M1, L1, L2, L3

Suggested Citation

Hsieh, Ying-Ying and Vergne, Jean-Philippe, Bitcoin and the Rise of Decentralized Autonomous Organizations (December 5, 2017). Journal of Organization Design, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3082911

Ying-Ying Hsieh (Contact Author)

Imperial College Business School ( email )

South Kensington Campus
Exhibition Road
London, Greater London SW7 2AZ
United Kingdom

Jean-Philippe Vergne

Western University - Ivey Business School ( email )

London, Ontario
Canada

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