Blockchain-based platforms: Decentralized infrastructures and its boundary conditions

Blockchain technology has been receiving much public attention recently, promising to disintermediate transactions through decentralized governance and distributed data-infrastructures. However, the majority of the previous studies have focused on the technical aspects, and overlooked blockchain investigation from a managerial perspective. In this paper, based on platform-ecosystem, transaction cost economics, and open-source literature, we contrast and compare blockchain-based platforms and centralized platforms; in other words, decentralized versus centralized governance modes. We base our conceptual analysis on three dimensions—transaction cost, cost of technology, and community involvement—, exploring the conditions under which blockchain-based platforms are more advantageous than centralized platforms. We first compare gains from lower opportunism and uncertainty costs thanks to protocols and smart contracts in blockchain technology versus the costs of higher coordination and complexity of (re)writing those contracts. Second, we compare the gains from immutability and transparency in blockchain-based platforms versus the technological costs of verification and storage of a distributed ledger. Finally, we compare intrinsic and extrinsic motivations of the communities around centralized and blockchain-based platforms in the short and medium term.