Why do blockchains exist?

Abstract

The word “technology” always follows the word “Blockchain”. Either perceived as a technological achievement or a general purpose technology, one thing should be taken for granted: Blockchain challenges the way people and firms interact. This paper analyzes the institutional capacity that Blockchain technology carries and presents these distinctive attributes with which Blockchain wishes to claim its thesis in the economic arena. It is argued that coordination mechanisms through smart contracts and reputation tools running on Blockchain can cultivate clusters of efficient cooperation among people, firms and organizations. Subsequently, these clusters can work as a paradigm-shifter for neighboring and competitive markets causing the further proliferation of this new way of definite coordination. Finally, this paper attempts to reply to the existential question “Why do Blockchains exist?” because it is the author’s belief that such a response is a sine qua non condition for the institutional character that Blockchain wishes to secure.