Corporate Capture of Blockchain Governance

52 Pages Posted: 25 Jan 2019 Last revised: 28 Jan 2019

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: January 22, 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 two-way 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 the governance of the blockchain is captured by a large firm.

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 (January 22, 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 ECARES ULB CP 114
B-1050 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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