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Blockchain: The birth of decentralized governance

Benito Arruñada () and Luis Garicano ()

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: By allowing networks to split, decentralized blockchain platforms protect members against hold up, but hinder coordination, given that adaptation decisions are ultimately decentralized. The current solutions to improve coordination, based on “premining” cryptocoins, taxing members and incentivizing developers, are insufficient. For blockchain to fulfill its promise and outcompete centralized firms, it needs to develop new forms of “soft” decentralized governance (anarchic, aristocratic, democratic, and autocratic) that allow networks to avoid bad equilibria.

Keywords: blockchain; platforms; networks; hold‐up; coordination; relational capital; incomplete contracts; decentralized governance (search for similar items in EconPapers)
JEL-codes: D23 L12 L22 L86 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-cta, nep-ind and nep-pay
Date: 2018-04
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Working Paper: Blockchain: The birth of Decentralized Governance (2018) Downloads
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