Disrupting governance with blockchains and smart contracts

Blockchain as an engine for auto-enforceable smart contracts could disrupt traditional governance structures by reducing bureaucracy through lower transaction costs, solving principal-agent issues, and subsequent moral hazard. While machine consensus can radically reduce transaction costs and disrupt traditional governance structures, there is a gap between initial conceptualizations of blockchains and their first instantiations. First use cases show that as circumstances change, protocols can become inappropriate for the new environment and require modification. Modification of blockchain code happens through majority consensus, but reaching consensus in a distributed multi-stakeholder network with sometimes unaligned interests is complex, potentially introducing new agency issues.