The policy dilemmas of blockchain

Blockchain is a new, emerging technology that is expected to have deep and “disruptive” effects on our economies and societies. It offers a new paradigm for the way in which information is registered, stored, and transacted. Blockchain is actually only one example of distributed ledger technology, which constitutes a physically decentralized and secure database, in the sense data are not held in one central site, rather they are held and updated simultaneously across several sites, theoretically making it more difficult to hack (Weiss and Biermann, 2020). Blockchain allows generated information to be stored in “blocks,” each of which is “stamped” and linked to the previous one, creating an unchangeable record of transactions (Cagigas et al., 2021). The process is conducted and verified via a predefined network protocol or “consensus mechanism” that specifies how the system is ruled. This permissions architecture can be used to determine whether, and to what extent, the blockchain itself will be largely left under the control of a centralized entity or authority or whether access and control of the blockchain will be shared among all those interested in participating. For example, depending on the permissions granted, participation in the verification process can be open and free or restricted to a group of users. In addition, the information registered in the blockchain can be more or less openly shared. At the most general level, then, blockchains are secure, immutable, anonymous, and decentralized digital records (or ledgers) of user-verified digital transactions. The first well-known blockchain product to emerge was Bitcoin, in 2008, which utilizes the technology for its most familiar usage—“cryptocurrency.” Today, there are thousands of cryptocurrencies that have been launched with different degrees of success.1 Since cryptocurrency became well known, there has been a second spike in public consciousness about blockchain around non-fungible tokens (NFTs), where one-of-a-kind digital assets are bought and sold every day. These NFTs can be as trivial as a “signed Tweet,” one of which was sold via auction in March 2021 for almost US$3 million.2 Yet, only 1 year later, the same product was put up for sale again, the highest bid being only US$280, inevitably questioning its intrinsic price.3 As a result, blockchain is sometimes associated with crypto-criminality, money laundering, or questionable frivolities in the digital art market

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Published in: Policy and Society
License: https://creativecommons.org/licenses/by/4.0/
See article on publisher's website: https://dx.doi.org/10.1093/polsoc/puac025