The Seven Capital Sins in the Governance of Blockchain Ecosystems

Abstract

In recent years, blockchain has gained traction as a technology to increase the security and transparency of firms' transactions. There is a widespread misconception that blockchains, once rolled out, are fully decentralized and transparent in terms of governance. The practice of many blockchain initiatives tells a different story: the development of a robust and reliable governance structure for a blockchain ecosystem requires balancing the power, accountability, and incentives of each blockchain member. This is a highly complex balancing act. It is important that CEOs, COOs and other top managers become deeply aware of the complexity of setting up and governing an (envisioned or existing) blockchain, to increase its success chances. In this article, we discuss what we consider are the seven capital sins of the governance of an enterprise blockchain that can hinder the successful implementation of this technology. These insights are based on three years of research in which we studied a large number of blockchain ecosystems.