Cryptocurrencies, Blockchain, and Public Choice

Abstract

This chapter looks through the public choice lens to explore how collective decisions can be impacted by technological innovations in cryptocurrency. It relies on the traditional public choice research agenda to analyze how crypto’s blockchain technology might influence the understanding of political and policy decisions. The chapter presents a set of illustrative case studies about non-market decision-making that have been thoroughly studied in public choice research. These case studies investigate whether cryptocurrency technology can potentially help improve decision-making. The chapter argues that developments in crypto technology illuminate the institutional arrangements surrounding non-market decision-making and can perhaps alleviate some public choice problems. It explores whether expanded opportunities for democracy from an institutional perspective can emerge from the use of the technology underlying crypto in three key areas: unanimity, parties and vote-trading, and special interest groups. Parties act as the grease and glue that allow elected officials to engage in political exchange within a legislative body.