Blockchain Toolbox for Digital Platforms

Abstract

 This chapter explores blockchain's potential as a versatile toolbox for digital platforms, examining how it can address three key challenges: market entry, value capture, and governance. We  outline four core blockchain tools -- the decentralized ledger, smart contracts, tokens, and dApps --- and explain their individual functionalities. Then we explore how these tools can be used to overcome challenges faced by traditional platforms, such as high coordination costs for market entry and centralized value extraction. We discuss the potential of blockchain tools to create more equitable and transparent governance structures, especially through the use of decentralized autonomous organizations (DAOs), but also difficulty in bringing this potential to reality. While blockchain promises to resolve long-standing platform challenges, such as disintermediation, trust, and governance—empirical evidence reveals significant limitations, including scalability issues, governance token centralization, and the complexities of integrating smart contracts with off-chain data.

Keywords: platforms, blockchain, smart contracts, tokens, DAOs, dApps, network effects

JEL Classification: L1, L2, D8, G2, O3