Cryptocurrency: governance for what was meant to be ungovernable

Abstract

Cryptocurrencies have the potential to revolutionize the exchange of information and money through blockchain and distributed ledger technologies. Despite the promise of such underlying technologies, their reliance upon distributed consensus processes to approve software updates raises the potential for governance failures to destabilize a given cryptocurrency. These governance failures, known as ‘hard forks,’ can separate a cryptocurrency into two rival camps. Where such events can destabilize a given cryptocurrency’s value, and instill distrust in the capacity of a cryptocurrency to survive as a reliable vehicle of exchange, it is imperative for the cryptocurrency community to improve their governance processes and limit the potential for hard forks to occur. While the distributed nature of cryptocurrency governance makes any traditional governing process unlikely to succeed, anticipatory approaches that establish thresholds and metrics to determine when software reform is necessary may help alleviate the governance failures presented by many hard forks.