Bitcoin and the rise of decentralized autonomous organizations

Author(s)

Ying-Ying Hsieh, Jean-Philippe Vergne, Philip Anderson, Karim Lakhani, Markus Georg Reitzig

Abstract

Bitcoin represents the first real-world implementation of a "decentralized autonomous organization" (DAO) and offers a new paradigm for organization design. Imagine working for a global business organization whose routine tasks are powered by a software protocol instead of being governed by managers and employees. Task assignments and rewards are randomized by the algorithm. Information is not channeled through a hierarchy but recorded transparently and securely on an immutable public ledger called "blockchain." Further, the organization decides on design and strategy changes through a democratic voting process involving a previously unseen class of stakeholders called "miners." Agreements need to be reached at the organizational level for any proposed protocol changes to be approved and activated. How do DAOs solve the universal problem of organizing with such novel solutions? What are the implications? We use Bitcoin as an example to shed light on how a DAO works in the cryptocurrency industry, where it provides a peer-to-peer, decentralized, and disintermediated payment system that can compete against traditional financial institutions. We also invited commentaries from renowned organization scholars to share their views on this intriguing phenomenon.

Organisation(s)

Department of Accounting, Innovation and Strategy

External organisation(s)

Imperial College London, University of Western Ontario, INSEAD Asia Campus, Harvard University

Journal

Journal of Organization Design

Volume

7

No. of pages

16

ISSN

2245-408X

DOI

https://doi.org/10.1186/s41469-018-0038-1

Publication date

11-2018

Peer reviewed

Yes

Austrian Fields of Science 2012

502015 Innovation management

Keywords

ASJC Scopus subject areas

Strategy and Management

Portal url

https://ucrisportal.univie.ac.at/en/publications/1cc22dfa-195a-428d-a693-be3f1db5fa87