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Corporate Capture of Blockchain Governance

Daniel Ferreira, Jin Li and Radoslawa Nikolowa ()
Additional contact information
Daniel Ferreira: London School of Economics, CEPR and ECGI
Jin Li: Hong Kong University, CEP

No 880, Working Papers from Queen Mary University of London, School of Economics and Finance

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; Proof-of-Work; Industrial Ecosystem (search for similar items in EconPapers)
JEL-codes: G30 L13 M20 (search for similar items in EconPapers)
Date: 2019-01-22
New Economics Papers: this item is included in nep-bec, nep-com, nep-ict and nep-pay
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