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Cryptodemocracy and its institutional possibilities

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Abstract

Democracy is an economic problem of choice constrained by transaction costs and information costs. Society must choose between competing institutional frameworks for the conduct of voting and elections. These decisions over the structure of democracy are constrained by the technologies and institutions available. As a governance technology, blockchain reduces the costs of coordinating information and preferences between dispersed people. Blockchain could be applied to the voting and electoral process to form new institutional possibilities in a cryptodemocracy. This paper analyses the potential of a cryptodemocracy using institutional cryptoeconomics and the Institutional Possibility Frontier (IPF). The central claim is that blockchain lowers the social costs of disorder in the democratic process, mainly by incorporating information about preferences through new structures of democratic decision making. We examine one potential new form of democratic institution, quadratic voting, as an example of a new institutional possibility facilitated by blockchain technology.

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Funding

This study is funded by RMIT University.

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Authors and Affiliations

  1. Blockchain Innovation Hub, RMIT University, Level 3, 440 Elizabeth Street, Melbourne, 3000, Australia

    Darcy W. E. Allen, Chris Berg & Jason Potts

  2. RMIT University, 405 Russell Street, Melbourne, 3000, Australia

    Aaron M. Lane

Authors
  1. Darcy W. E. Allen
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  2. Chris Berg
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  3. Aaron M. Lane
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  4. Jason Potts
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Corresponding author

Correspondence to Darcy W. E. Allen.

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Allen, D.W.E., Berg, C., Lane, A.M. et al. Cryptodemocracy and its institutional possibilities. Rev Austrian Econ 33, 363–374 (2020). https://doi.org/10.1007/s11138-018-0423-6

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  • DOI: https://doi.org/10.1007/s11138-018-0423-6

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