Department of Economics and Business - Universitat Pompeu Fabra

Title:: Blockchain: The birth of decentralized governance
Authors:: Benito Arruñada and Luis Garicano
Date:: April 2018
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
JEL codes:: D23, L12, L22, L86
Area of Research:: Business Economics and Industrial Organization

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