The Siren Song: Algorithmic Governance By Blockchain

After the Digital Tornado: Networks, Algorithms, Humanity (Kevin Werbach, ed., 2020, Forthcoming)

31 Pages Posted: 12 May 2020

See all articles by Kevin Werbach

Kevin Werbach

University of Pennsylvania, The Wharton School, Legal Studies & Business Ethics Department

Date Written: September 24, 2018

Abstract

A central theme in internet history since the 1990s is the rise of algorithmic power, enabled through the self-restraint of human governments. Digital platforms were born weak and clumsy. Governments could have stamped them out to enforce traditional territorial boundaries and regulatory categories. They chose not to. Once the digital tornado was unleashed, however, its path was not easily directed. Fledgling innovators in need of protection developed into dominant platforms that transformed many aspects of the world for the better, but also created serious harms through pervasive data collection and automated decision-making. The threats arose from the very attributes that made these digital systems so appealing.

The cycle is now repeating itself. Another broad-based technological shift is empowering market entrants that promise huge gains in both efficiency and freedom. And once again, the deeper challenge is how to regulate their own penchant for algorithmic overreach.

Blockchain and cryptocurrency technologies are today’s digital tornado. Like the internet, they are stimulating dramatic levels of investment, startup activity, and media attention, as well as creating massive disruption of industries and passionate visions of societal transformation. As with the internet, this excitement often gets ahead of reality. The internet economy recovered from the dotcom crash of the early 2000s to realize its potential through the growth of social media, cloud computing, and mobile connectivity. The crypto economy seems likely to experience a similar trajectory over time. To succeed at scale, however, blockchain-based networks and services will need address the problem of governance. Immutability, the mechanism that allows these systems to generate trust without central authorities, also creates inherent weaknesses that sometimes turn into catastrophic failures.

Keywords: blockchain, governance

Suggested Citation

Werbach, Kevin, The Siren Song: Algorithmic Governance By Blockchain (September 24, 2018). After the Digital Tornado: Networks, Algorithms, Humanity (Kevin Werbach, ed., 2020, Forthcoming), Available at SSRN: https://ssrn.com/abstract=3578610

Kevin Werbach (Contact Author)

University of Pennsylvania, The Wharton School, Legal Studies & Business Ethics Department ( email )

3730 Walnut Street
Suite 600
Philadelphia, PA 19104-6365
United States
215-898-1222 (Phone)

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