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Economic and business dimensions

When Permissioned Blockchains Deliver More Decentralization Than Permissionless


blocks and keyholes, illustration

Credit: Yurchanka Siarhei

Permissionless blockchain systems inspired by Bitcoin and related crypto-ecosystems are frequently promoted as the enablers of an open, distributed, and decentralized ideal. They are hailed as a solution that can "democratize" the economy by creating a technological imperative favoring open, distributed, and decentralized systems, platforms, and markets. We argue that such claims and expectations, while they may be fulfilled under certain circumstances, are frequently exaggerated or even misguided. They illustrate a tendency to equate open access with decentralized control in distributed architectures, an association that while possible is far from guaranteed. When enterprise, social and economic activities are "put on the blockchain" in order to avoid centralized control, permissioned governance may offer a more decentralized and more predictable outcome than open permissionless governance offers in practice.

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Access and Control in Distributed Systems

Information systems can be characterized on three key dimensions: architecture, which can be concentrated or distributed,17 access, which can be permissionless or permissioned,1 and control (that is, the locus of decision rights), which can be centralized or decentralized.7 These dimensions are not binary, and the associated labels should be thought as endpoints of a continuum.


 

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