chapter  3
21 Pages

The internal and external governance of blockchain-basedorganizations

Evidence from cryptocurrencies
WithYing-Ying Hsieh, Jean-Philippe (JP) Vergne, Sha Wang

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Blockchain technology proposes to create value by decentralizing the creation, verification, validation, and secure storage of economic transactions, both within and between organizations. The chapter provides deeper understanding of how these blockchain solutions would be operated and by whom. It focuses on decentralization as the key dimension by which organizational governance forms vary. The chapter utilizes theory on organizational and corporate governance to unpack how blockchain-based organizations operate. It examines the relationship between internal and external governance design features and cryptocurrency returns. Blockchain-based organizations such as cryptocurrencies compete with traditional economic institutions by proposing alternative forms of organizational governance. Demand for cryptocurrencies mainly stems from two sources: first, consumers and merchants using cryptocurrencies as a means of payment; and second, investors holding a cryptocurrency as an investment, hoping that the price will rise. Many cryptocurrencies were created from the open-source Bitcoin software code, and follow the same open-source development model.