Proposed classification of blockchains based on authority and incentive dimensions

Abstract

The potential of blockchain technology has received attention in the area of FinTech - the combination of finance and technology. Blockchain technology was first introduced as the technology behind the Bitcoin decentralized virtual currency, but there is the expectation that its characteristics of accurate and irreversible data transfer in a decentralized P2P network could make other applications possible. Although a precise definition of blockchain technology has not yet been given, it is important to consider how to classify different blockchain systems in order to better understand their potential and limitations. The goal of this paper is to add to the discussion on blockchain technology by proposing a classification based on two dimensions external to the system: (1) existence of an authority (without an authority and under an authority) and (2) incentive to participate in the blockchain (market-based and non-market-based). The combination of these elements results in four types of blockchains. We define these dimensions and describe the characteristics of the blockchain systems belonging to each classification.