Economic Perspectives on the Governance of Blockchains

Abstract

The structure and operation of blockchains are dynamic, which means that mechanisms must exist for implementing changes. The New Institutional Economics (NIE), with its emphasis on how rules govern the performance of any complex organization or network, provides an especially useful framework to consider governance of blockchains. We consider how NIE has been applied to blockchain and future applications. Our analysis is divided into consideration of blockchain networks as institutional technologies, blockchain networks as knowledge commons and polycentric enterprises, and the ways to empirically research blockchain networks. The Institutional Analysis and Design (IAD) framework developed by Elinor Ostrom is particularly useful to develop an empirical research agenda for comparing the institutional features of blockchains and, ultimately, to comparing their performance.