Collusion Risk and Responsibility in Public Cryptocurrency Protocol Development

21 Pages Posted: 3 May 2019 Last revised: 10 May 2019

Date Written: March 18, 2019

Abstract

Cryptocurrencies are based on cryptography-based asset disposals broadcasted peer-to-peer to be validated in a decentralized way according to consented protocols. The cryptocurrency protocols offer the participants various mechanisms for decentralized validation protecting the integrity of the transactions without trusted third parties. Public cryptocurrencies are also decentralized when it comes to protocol development. However, fewer formal decentralized mechanisms are offered when it comes to protecting the integrity of such development. Protocol development is associated with risks, and there are conflicts of interests. Collusion may exacerbate such risks. This paper explores collusion risks and associated responsibilities. Responsibility gives some, but not sufficient, protection against such risks. Additional policies to mitigate risks are discussed.

Keywords: Algorithms, Blockchain, Cryptocurrencies, Collusion, Open Source, Risk, Responsibility

JEL Classification: E42, G28, K21, K24

Suggested Citation

Østbye, Peder, Collusion Risk and Responsibility in Public Cryptocurrency Protocol Development (March 18, 2019). Available at SSRN: https://ssrn.com/abstract=3354868 or http://dx.doi.org/10.2139/ssrn.3354868

Peder Østbye (Contact Author)

Norges Bank ( email )

P.O. Box 1179
Oslo, N-0107
Norway

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