Blockchain-based platforms: decentralized infrastructures and its boundary conditions

Joana Pereira, Mahdi Tavalei, H. Ozalp

Research output: Contribution to JournalArticleAcademicpeer-review

Abstract

Blockchain technology has been receiving much public attention recently, promising to disintermediate transactions through a decentralized governance and a distributed data-infrastructure. However, the majority of the previous studies have focused on the technical aspects, and overlooked blockchain investigation from a managerial perspective. In this paper, based on platform-ecosystem, transaction cost economics, and open-source literature, we contrast and compare blockchain-based platforms and centralized platforms; in other words, decentralized versus centralized governance of the platform. We base our conceptual analysis on three dimensions—transaction cost, cost of technology, and community involvement—, exploring the conditions under which blockchain-based platforms are more advantageous than centralized platforms. We, first, compare gains from lower opportunism and uncertainty thanks to protocols and smart contracts in blockchain technology versus costs of higher coordination and complexity of (re)writing those contracts. Second, we compare gains from immutability and transparency in blockchain-based platforms versus the technological cost of verification and distributed ledger infrastructure. Finally, we compare intrinsic and extrinsic motivations of community around centralized and blockchain-based platforms to participate and different mechanism involved, i.e. pricing mechanism in the former and crypto-incentives in the latter.
LanguageEnglish
JournalTechnological Forecasting and Social Change
Publication statusPublished - 2019

Fingerprint

Boundary conditions
Costs and Cost Analysis
Costs
Contracts
Motivation
High-Cost Technology
Technology
Uncertainty
Ecosystem
Transparency
Ecosystems
Economics
Network protocols
Governance
Open source
Incentives
Pricing mechanism
Transaction cost economics
Extrinsic motivation
Community involvement

Keywords

  • blockchain technology
  • platform ecosystems
  • decentralized governance
  • transaction cost economics
  • smart contracts

Cite this

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title = "Blockchain-based platforms: decentralized infrastructures and its boundary conditions",
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Blockchain-based platforms: decentralized infrastructures and its boundary conditions. / Pereira, Joana; Tavalei, Mahdi; Ozalp, H.

In: Technological Forecasting and Social Change, 2019.

Research output: Contribution to JournalArticleAcademicpeer-review

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AU - Pereira, Joana

AU - Tavalei, Mahdi

AU - Ozalp, H.

PY - 2019

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AB - Blockchain technology has been receiving much public attention recently, promising to disintermediate transactions through a decentralized governance and a distributed data-infrastructure. However, the majority of the previous studies have focused on the technical aspects, and overlooked blockchain investigation from a managerial perspective. In this paper, based on platform-ecosystem, transaction cost economics, and open-source literature, we contrast and compare blockchain-based platforms and centralized platforms; in other words, decentralized versus centralized governance of the platform. We base our conceptual analysis on three dimensions—transaction cost, cost of technology, and community involvement—, exploring the conditions under which blockchain-based platforms are more advantageous than centralized platforms. We, first, compare gains from lower opportunism and uncertainty thanks to protocols and smart contracts in blockchain technology versus costs of higher coordination and complexity of (re)writing those contracts. Second, we compare gains from immutability and transparency in blockchain-based platforms versus the technological cost of verification and distributed ledger infrastructure. Finally, we compare intrinsic and extrinsic motivations of community around centralized and blockchain-based platforms to participate and different mechanism involved, i.e. pricing mechanism in the former and crypto-incentives in the latter.

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KW - transaction cost economics

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