Blockchain: The Emergence of Distributed Autonomous Institutions

Abstract

We present a novel institutional perspective on the distributed consensus and ledger technology known as blockchain. We discuss the concept of Distributed Autonomous Institutions that are able to facilitate global interactions, contracts, and value transfers, all of which are achieved without the need for the human-based third party trust. We argue that due to its properties and design blockchain technology represents a disruptive change in the modelling paradigms of socio-technical systems. Distributed trust and consensus mechanisms offered by blockchain technology represent a novel, qualitatively different, phenomenon. We present the general design principles, stakeholders, the dynamics between those stakeholders, the incentive models, and the consensus protocols currently used in blockchains, before highlighting the potential of blockchain technology to develop distributed autonomous institutions. We conclude with a discussion of challenges associated with the adoption of blockchain technology.