Abstract
I analyze cryptocurrency ecosystems with Elinor Ostrom’s meta-framework for self-governance. I conclude that Bitcoin falls short in its self-governing ambitions, while cryptocurrency software protocols and blockchain technologies have potentialities within “permissioned” peer-to-peer private or hybrid networks. However, regulation and supervision by trusted third parties are required.
| Original language | English |
|---|---|
| Pages (from-to) | 385-393 |
| Number of pages | 9 |
| Journal | Journal of Economic Issues |
| Volume | 53 |
| Issue number | 2 |
| DOIs | |
| Publication status | Published - 3 Apr 2019 |
Funding
Organizations behind cryptocurrency influence their governance. For example, the Bitcoin Foundation (2018a, 2018b, 2018c)—whose directors have a personal interest in blockchains—and other non-profit organizations coordinate efforts of cryptocurrency communities such as funding of core programmers, lobbying upon legislators to make cryptocurrency a success, and developing a platform. Values expressed by the Bitcoin Foundation concern privacy, guaranteed financial access, decentralization (“centralization of money supply leads to corruption and exploitation”), autonomy, financial inclusion, and stable money supply. Cryptocurrency internet platforms (such as bitcoin.org) are owned by the community but are likely to be influenced by sponsors (for instance, the exchange Paxful) and the website maintainer. The platforms give customers and providers of services access to public ledgers. Customers are consumers and businesses (such as, traders). Providers of processing services are programmers and validators of transactions (the so-called miners). Providers of financial services are middlemen such as wallet providers, exchanges, and mixers. Mixers lump transactions together to obfuscate the identity of customers.
Keywords
- cryptocurrency
- governance