Corporate Capture of Blockchain Governance

64 Pages Posted: 25 Jan 2019 Last revised: 25 Mar 2020

See all articles by Daniel Ferreira

Daniel Ferreira

London School of Economics - Department of Finance; European Corporate Governance Institute (ECGI); Centre for Economic Policy Research (CEPR)

Jin Li

Northwestern University - Department of Management & Strategy

Radoslawa Nikolowa

Queen Mary, University of London

Multiple version iconThere are 2 versions of this paper

Date Written: October 1, 2019

Abstract

We develop a theory of blockchain governance. In our model, the proof-of-work system, which is the most common set of rules for validating transactions in blockchains, creates an industrial ecosystem with specialized suppliers of goods and services. We analyze the interactions between blockchain governance and the market structure of the industries in the blockchain ecosystem. Our main result is that the proof-of-work system leads to a situation where a large firm captures the governance of the blockchain.

Keywords: Governance, Blockchain, Industrial Ecosystem, Proof-of-Work

JEL Classification: G30, L13, M20

Suggested Citation

Ferreira, Daniel and Li, Jin and Nikolowa, Radoslawa, Corporate Capture of Blockchain Governance (October 1, 2019). European Corporate Governance Institute (ECGI) - Finance Working Paper No. 593/2019. Available at SSRN: https://ssrn.com/abstract=3320437 or http://dx.doi.org/10.2139/ssrn.3320437

Daniel Ferreira (Contact Author)

London School of Economics - Department of Finance ( email )

Houghton Street
London, WC2A 2AE
United Kingdom
(+44) 20 7955 7544 (Phone)

HOME PAGE: http://personal.lse.ac.uk/FERREIRD/

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Jin Li

Northwestern University - Department of Management & Strategy ( email )

Kellogg School of Management
2001 Sheridan Road
Evanston, IL 60208
United States

Radoslawa Nikolowa

Queen Mary, University of London ( email )

Lincoln's Inn Fields
Mile End Rd.
London, E1 4NS
United Kingdom

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