IDEAS home Printed from https://ideas.repec.org/a/eee/teinso/v62y2020ics0160791x20303067.html
   My bibliography  Save this article

Blockchain as a confidence machine: The problem of trust & challenges of governance

Author

Listed:
  • De Filippi, Primavera
  • Mannan, Morshed
  • Reijers, Wessel

Abstract

Blockchain technology was created as a response to the trust crisis that swept the world in the wake of the 2008 financial crisis. Bitcoin and other blockchain-based systems were presented as a “trustless” alternative to existing financial institutions and even governments. Yet, while the trustless nature of blockchain technology has been heavily questioned, little research has been done as to what blockchain technologies actually bring to the table in place of trust. This article draws from the extensive academic discussion on the concepts of “trust” and “confidence” to argue that blockchain technology is not a ‘trustless technology’ but rather a ‘confidence machine’. First, the article provides a review of the multifaceted conceptualisations of trust and confidence, and the relationship between these two concepts. Second, the claim is made that blockchain technology relies on cryptographic rules, mathematics, and game-theoretical incentives in order to increase confidence in the operations of a computational system. Yet, such an increase in confidence ultimately relies on the proper operation and governance of the underlying blockchain-based network, which requires trusting a variety of actors. Third, the article turns to legal, constitutional and polycentric governance theory to explore the governance challenges of blockchain-based systems, in light of the tension between procedural confidence and trust.

Suggested Citation

  • De Filippi, Primavera & Mannan, Morshed & Reijers, Wessel, 2020. "Blockchain as a confidence machine: The problem of trust & challenges of governance," Technology in Society, Elsevier, vol. 62(C).
    • Handle: RePEc:eee:teinso:v:62:y:2020:i:c:s0160791x20303067
    DOI: 10.1016/j.techsoc.2020.101284
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0160791X20303067
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.techsoc.2020.101284?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Chase Foster & Jeffry Frieden, 2017. "Crisis of trust: Socio-economic determinants of Europeans’ confidence in government," European Union Politics, , vol. 18(4), pages 511-535, December.
    2. Sara Saberi & Mahtab Kouhizadeh & Joseph Sarkis & Lejia Shen, 2019. "Blockchain technology and its relationships to sustainable supply chain management," International Journal of Production Research, Taylor & Francis Journals, vol. 57(7), pages 2117-2135, April.
    3. De Filippi, Primavera & Loveluck, Benjamin, 2016. "The invisible politics of Bitcoin: governance crisis of a decentralised infrastructure," Internet Policy Review: Journal on Internet Regulation, Alexander von Humboldt Institute for Internet and Society (HIIG), Berlin, vol. 5(3), pages 1-28.
    4. Ostrom, Vincent & Tiebout, Charles M. & Warren, Robert, 1961. "The Organization of Government in Metropolitan Areas: A Theoretical Inquiry," American Political Science Review, Cambridge University Press, vol. 55(4), pages 831-842, December.
    5. Williamson, Oliver E, 1993. "Calculativeness, Trust, and Economic Organization," Journal of Law and Economics, University of Chicago Press, vol. 36(1), pages 453-486, April.
    6. Timothy C. Earle, 2009. "Trust, Confidence, and the 2008 Global Financial Crisis," Risk Analysis, John Wiley & Sons, vol. 29(6), pages 785-792, June.
    7. Shruti Rajagopalan & Richard Wagner, 2013. "Constitutional craftsmanship and the rule of law," Constitutional Political Economy, Springer, vol. 24(4), pages 295-309, December.
    8. Andoni, Merlinda & Robu, Valentin & Flynn, David & Abram, Simone & Geach, Dale & Jenkins, David & McCallum, Peter & Peacock, Andrew, 2019. "Blockchain technology in the energy sector: A systematic review of challenges and opportunities," Renewable and Sustainable Energy Reviews, Elsevier, vol. 100(C), pages 143-174.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Birgitte van Haaren-van Duijn & Jaime Bonnín Roca & Annie Chen & A. Georges L. Romme & Mathieu Weggeman, 2022. "The Dynamics of Governing Enterprise Blockchain Ecosystems," Administrative Sciences, MDPI, vol. 12(3), pages 1-21, July.
    2. Jovanovic, Marin & Kostić, Nikola & Sebastian, Ina M. & Sedej, Tomaz, 2022. "Managing a blockchain-based platform ecosystem for industry-wide adoption: The case of TradeLens," Technological Forecasting and Social Change, Elsevier, vol. 184(C).
    3. Jacobs, Mattis & Kurtz, Christian & Simon, Judith & Böhmann, Tilo, 2021. "Value Sensitive Design and power in socio-technical ecosystems," Internet Policy Review: Journal on Internet Regulation, Alexander von Humboldt Institute for Internet and Society (HIIG), Berlin, vol. 10(3), pages 1-26.
    4. Böyükaslan, Adem & Ecer, Fatih, 2021. "Determination of drivers for investing in cryptocurrencies through a fuzzy full consistency method-Bonferroni (FUCOM-F’B) framework," Technology in Society, Elsevier, vol. 67(C).
    5. Mohammad Hossein Ronaghi & Mohammad Mosakhani, 2022. "The effects of blockchain technology adoption on business ethics and social sustainability: evidence from the Middle East," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(5), pages 6834-6859, May.
    6. Hartman, Paul & Ogden, Jeff & Jackson, Ross, 2020. "Contract duration: Barrier or bridge to successful public-private partnerships?," Technology in Society, Elsevier, vol. 63(C).
    7. Schinckus, Christophe, 2022. "A Nuanced perspective on blockchain technology and healthcare," Technology in Society, Elsevier, vol. 71(C).
    8. Xiao, Yunpeng & Deng, Bufan & Chen, Siqi & Zhou, Kyrie Zhixuan & LC, RAY & Zhang, Luyao & Tong, Xin, 2023. ""Centralized or Decentralized?": Concerns and Value Judgments of Stakeholders in the Non-Fungible Tokens (NFTs) Market," OSF Preprints evz4p, Center for Open Science.
    9. repec:arp:sjbmms:2022:p:1-7 is not listed on IDEAS
    10. Papanikolaou, Efstathios & Angelis, Jannis & Moustakis, Vassilis, 2023. "Which type of ecosystem for distributed ledger technology?," Technology in Society, Elsevier, vol. 72(C).
    11. Dwivedi, Yogesh K. & Balakrishnan, Janarthanan & Das, Ronnie & Dutot, Vincent, 2023. "Resistance to innovation: A dynamic capability model based enquiry into retailers’ resistance to blockchain adaptation," Journal of Business Research, Elsevier, vol. 157(C).
    12. Primavera De Filippi & Morshed Mannan & Wessel Reijers, 2022. "The alegality of blockchain technology [El Salvador becomes first nation to bitcoin legal tender]," Policy and Society, Darryl S. Jarvis and M. Ramesh, vol. 41(3), pages 358-372.
    13. Lu, Liyan & Liang, Changyong & Gu, Dongxiao & Ma, Yiming & Xie, Yuguang & Zhao, Shuping, 2021. "What advantages of blockchain affect its adoption in the elderly care industry? A study based on the technology–organisation–environment framework," Technology in Society, Elsevier, vol. 67(C).
    14. Pompeu Casanovas & Louis de Koker & Mustafa Hashmi, 2022. "Law, Socio-Legal Governance, the Internet of Things, and Industry 4.0: A Middle-Out/Inside-Out Approach," J, MDPI, vol. 5(1), pages 1-28, January.
    15. Onjewu, Adah-Kole Emmanuel & Walton, Nigel & Koliousis, Ioannis, 2023. "Blockchain agency theory," Technological Forecasting and Social Change, Elsevier, vol. 191(C).
    16. De Filippi, Primavera & Wray, Chris & Sileno, Giovanni, 2021. "Smart contracts," Internet Policy Review: Journal on Internet Regulation, Alexander von Humboldt Institute for Internet and Society (HIIG), Berlin, vol. 10(2), pages 1-9.
    17. Bakhtiar, Tiam & Luo, Xiaojun & Adelopo, Ismail, 2023. "Network effects and store-of-value features in the cryptocurrency market," Technology in Society, Elsevier, vol. 74(C).
    18. Chand Bhatt, Priyanka & Kumar, Vimal & Lu, Tzu-Chuen & Daim, Tugrul, 2021. "Technology convergence assessment: Case of blockchain within the IR 4.0 platform," Technology in Society, Elsevier, vol. 67(C).
    19. Tseng, Fang-Mei & Palma Gil, Eunice Ina N. & Lu, Louis Y.Y., 2021. "Developmental trajectories of blockchain research and its major subfields," Technology in Society, Elsevier, vol. 66(C).
    20. Batwa, Abbas & Norrman, Andreas & Arvidsson, Ala, 2021. "How Blockchain interrelates with trust in the supply chain context: Insights from tracing sustainability in the metal industry," Chapters from the Proceedings of the Hamburg International Conference of Logistics (HICL), in: Kersten, Wolfgang & Ringle, Christian M. & Blecker, Thorsten (ed.), Adapting to the Future: How Digitalization Shapes Sustainable Logistics and Resilient Supply Chain Management. Proceedings of the Hamburg Internationa, volume 31, pages 329-351, Hamburg University of Technology (TUHH), Institute of Business Logistics and General Management.
    21. Yunpeng Xiao & Bufan Deng & Siqi Chen & Kyrie Zhixuan Zhou & Ray LC & Luyao Zhang & Xin Tong, 2023. ""Centralized or Decentralized?": Concerns and Value Judgments of Stakeholders in the Non-Fungible Tokens (NFTs) Market," Papers 2311.10990, arXiv.org, revised Nov 2023.
    22. Phuong Duy Huynh & Son Hoang Dau & Xiaodong Li & Phuc Luong & Emanuele Viterbo, 2023. "Improving Robustness and Accuracy of Ponzi Scheme Detection on Ethereum Using Time-Dependent Features," Papers 2308.16391, arXiv.org.
    23. Igor Calzada, 2022. "Emancipatory Urban Citizenship Regimes in Postpandemic Catalonia, Scotland, and Wales," Social Sciences, MDPI, vol. 11(12), pages 1-14, December.
    24. Zuobin Ying & Wusong Lan & Chen Deng & Lu Liu & Ximeng Liu, 2023. "DVIT—A Decentralized Virtual Items Trading Forum with Reputation System," Mathematics, MDPI, vol. 11(2), pages 1-23, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mahmoona Khalil & Kausar Fiaz Khawaja & Muddassar Sarfraz, 2022. "The adoption of blockchain technology in the financial sector during the era of fourth industrial revolution: a moderated mediated model," Quality & Quantity: International Journal of Methodology, Springer, vol. 56(4), pages 2435-2452, August.
    2. Naif Al Azmi & Ghaleb Sweis & Rateb Sweis & Farouq Sammour, 2022. "Exploring Implementation of Blockchain for the Supply Chain Resilience and Sustainability of the Construction Industry in Saudi Arabia," Sustainability, MDPI, vol. 14(11), pages 1-17, May.
    3. Xiwen Fu & Shuxin Wang, 2022. "How to Promote Low-Carbon Cities with Blockchain Technology? A Blockchain-Based Low-Carbon Development Model for Chinese Cities," Sustainability, MDPI, vol. 14(20), pages 1-17, October.
    4. Gloria Luzzani & Erica Grandis & Marco Frey & Ettore Capri, 2021. "Blockchain Technology in Wine Chain for Collecting and Addressing Sustainable Performance: An Exploratory Study," Sustainability, MDPI, vol. 13(22), pages 1-17, November.
    5. Sara Jonsson & Inga-Lill Söderberg, 2018. "Investigating explanatory theories on laypeople’s risk perception of personal economic collapse in a bank crisis – the Cyprus case," Journal of Risk Research, Taylor & Francis Journals, vol. 21(6), pages 763-779, June.
    6. Chand Bhatt, Priyanka & Kumar, Vimal & Lu, Tzu-Chuen & Daim, Tugrul, 2021. "Technology convergence assessment: Case of blockchain within the IR 4.0 platform," Technology in Society, Elsevier, vol. 67(C).
    7. Kouhizadeh, Mahtab & Saberi, Sara & Sarkis, Joseph, 2021. "Blockchain technology and the sustainable supply chain: Theoretically exploring adoption barriers," International Journal of Production Economics, Elsevier, vol. 231(C).
    8. Yildizbasi, Abdullah, 2021. "Blockchain and renewable energy: Integration challenges in circular economy era," Renewable Energy, Elsevier, vol. 176(C), pages 183-197.
    9. Kimani, Danson & Adams, Kweku & Attah-Boakye, Rexford & Ullah, Subhan & Frecknall-Hughes, Jane & Kim, Ja, 2020. "Blockchain, business and the fourth industrial revolution: Whence, whither, wherefore and how?," Technological Forecasting and Social Change, Elsevier, vol. 161(C).
    10. Cerchione, Roberto & Centobelli, Piera & Riccio, Emanuela & Abbate, Stefano & Oropallo, Eugenio, 2023. "Blockchain’s coming to hospital to digitalize healthcare services: Designing a distributed electronic health record ecosystem," Technovation, Elsevier, vol. 120(C).
    11. Orji, Ifeyinwa Juliet & Kusi-Sarpong, Simonov & Huang, Shuangfa & Vazquez-Brust, Diego, 2020. "Evaluating the factors that influence blockchain adoption in the freight logistics industry," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 141(C).
    12. Bai, Chunguang & Zhu, Qingyun & Sarkis, Joseph, 2021. "Joint blockchain service vendor-platform selection using social network relationships: A multi-provider multi-user decision perspective," International Journal of Production Economics, Elsevier, vol. 238(C).
    13. Vlad Tarko & Andrew Farrant, 2019. "The efficiency of regulatory arbitrage," Public Choice, Springer, vol. 181(1), pages 141-166, October.
    14. Garg, Poonam & Gupta, Bhumika & Chauhan, Ajay Kumar & Sivarajah, Uthayasankar & Gupta, Shivam & Modgil, Sachin, 2021. "Measuring the perceived benefits of implementing blockchain technology in the banking sector," Technological Forecasting and Social Change, Elsevier, vol. 163(C).
    15. Riya Kakkar & Rajesh Gupta & Smita Agrawal & Pronaya Bhattacharya & Sudeep Tanwar & Maria Simona Raboaca & Fayez Alqahtani & Amr Tolba, 2022. "Blockchain and Double Auction-Based Trustful EVs Energy Trading Scheme for Optimum Pricing," Mathematics, MDPI, vol. 10(15), pages 1-24, August.
    16. Fernando, Yudi & Rozuar, Nor Hazwani Mohd & Mergeresa, Fineke, 2021. "The blockchain-enabled technology and carbon performance: Insights from early adopters," Technology in Society, Elsevier, vol. 64(C).
    17. Moritz Böhmecke‐Schwafert & Marie Wehinger & Robin Teigland, 2022. "Blockchain for the circular economy: Theorizing blockchain's role in the transition to a circular economy through an empirical investigation," Business Strategy and the Environment, Wiley Blackwell, vol. 31(8), pages 3786-3801, December.
    18. Fuli Zhou & Yijie Liu, 2022. "Blockchain-Enabled Cross-Border E-Commerce Supply Chain Management: A Bibliometric Systematic Review," Sustainability, MDPI, vol. 14(23), pages 1-23, November.
    19. Perrons, Robert K. & Cosby, Tonya, 2020. "Applying blockchain in the geoenergy domain: The road to interoperability and standards," Applied Energy, Elsevier, vol. 262(C).
    20. Vincenzo Varriale & Antonello Cammarano & Francesca Michelino & Mauro Caputo, 2021. "Sustainable Supply Chains with Blockchain, IoT and RFID: A Simulation on Order Management," Sustainability, MDPI, vol. 13(11), pages 1-23, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:teinso:v:62:y:2020:i:c:s0160791x20303067. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.journals.elsevier.com/technology-in-society .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.