DP13493 Corporate Capture of Blockchain Governance
|Author(s):||Daniel Ferreira, Jin Li, Radoslawa Nikolowa|
|Publication Date:||January 2019|
|Keyword(s):||blockchain, governance, Industrial Ecosystem, Proof-of-Work|
|JEL(s):||G30, L13, M20|
|Programme Areas:||Financial Economics, Industrial Organization|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=13493|
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.