Reasons to Be Cheerful: The Benevolent Market Power of Decentralised Blockchains

Abstract

Blockchain technology has in recent years captured attention and funding based on its promise to build trust among multiple parties without the need for a trusted intermediary. Born out of government-funded research on game theoretic Byzantine consensus, it offers the prospect of a more efficient way to build trust in transactions; trust in a product’s provenance, or trust in a contract’s execution. In competition policy, the focus of work on blockchains has, since the OECD’s thought leading work on the topic began in 2018, been on the possible anticompetitive risks posed by the technology, and the question of whether there was anything new about these risks. While we remain highly uncertain as to the prospects of a Blockchain revolution, in this paper, we therefore focus instead on the reasons for optimism, and in particular, why we think that decentralised permission-less blockchains offer the prospect of radical pro-competitive and inclusive efficiencies, and hence might contribute to a pro-competitive industrial policy. We therefore expect that blockchain will continue to capture the attention of policymakers that are keen to deliver shared prosperity in a post-COVID world, and we suggest that competition agencies might usefully engage in facilitating the emergence of a particular type of Blockchain, specifically decentralised permission-less blockchains with platform functionality.