March 21, 2019
Constitutional rules determine how laws are enacted, administered, and adjudicated in a given society. While these rules have been widely studied, developing general insights about how constitutional design can inform private governance mechanisms has been more difficult. This research from Eric Alston examines blockchains as a type of constitutional rule set and explains how the development of cryptocurrency blockchains has led to new forms of competition in private governance:
- Beginning with a review of the literature from constitutional amendment processes, Alston examines how comparatively more or less rigid constitutions have been linked to different outcomes in practice.
- Alston then outlines how the underlying network rules for the blockchains supporting major cryptocurrencies are similar to and distinct from constitutional rules.
- Finally, Alston compares existing and proposed governance structures for blockchains, especially those supporting the cryptocurrencies Bitcoin and Ether. Other permissionless use cases are also discussed.
This analysis highlights the competitive benefits and costs that result from choices in constitutional governance, with a view to the intended functions of a given blockchain. This research also outlines both the general trade-offs in governance created by competition between cryptocurrency blockchains and the surprising ways in which these unique competitive margins may influence other outcomes.