The Implications of Blockchain for Income Inequality

Abstract

This chapter discusses the implications of blockchain technology for income inequality. Although inequality is identified as a complex and emergent (rather than simple and static) phenomenon, we nonetheless are able to identify channels through which blockchains are likely to affect the distribution of income. Any erosion of economic positions held by third-party intermediaries, charged with maintaining the integrity of conventional ledgers, is likely to reduce inequality. On the other hand job-creation opportunities which emphasize the need for specialist technical skills in the blockchain-enabled economy may increase inequality. The net effect of these two forces alone is ambiguous. There is the alternative possibility that the inequality-reduction potential of blockchain activity could be mitigated by the appropriation of distributed ledger technology by incumbents. To help prevent the possibility of income inequality being reproduced through the blockchain, an open and permissionless environment for blockchain participation should be maintained to the greatest extent possible.