Blockchain: The Birth of Decentralized Governance
Pompeu Fabra University, Economics and Business Working Paper Series, 1608
38 Pages Posted: 11 May 2018
Date Written: April 10, 2018
By allowing networks to split, decentralized blockchain platforms protect members against hold up, but hinder coordination, given that adaptation decisions are ultimately decentralized. The current solutions to improve coordination, based on “premining” cryptocoins, taxing members and incentivizing developers, are insufficient. For blockchain to fulfill its promise and out-compete centralized firms, it needs to develop new forms of “soft” decentralized governance (anarchic, aristocratic, democratic, and autocratic) that allow networks to avoid bad equilibria.
Keywords: Blockchain, Platforms, Networks, Hold-Up, Coordination, Relational Capital, Incomplete Contracts, Decentralized Governance
JEL Classification: D23, L12, L22, L86
Suggested Citation: Suggested Citation