Responsible Public Cryptocurrency Protocol Development

Abstract

Cryptocurrencies have entered the economy as alternative money, speculation objects, and as utility tokens for digital platforms. Cryptocurrencies are based on cryptography-based asset disposals broadcasted peer-to-peer to be validated in a decentralized way according to consented protocols. In a public cryptocurrency, the protocol development itself is also decentralized. This paper discusses the influence of protocol developers on the risks associated with a cryptocurrency and addresses the protocol developers' responsibility for these risks. Both the forward-looking responsibility to mitigate risk and the backward-looking responsibility for harm are discussed. It is found that protocol developers lack sufficient forward-looking responsibility. The regulation of a cryptocurrency's broader financial ecosystem and backward-looking responsibility may remedy insufficient forward-looking responsibility. However, backward-looking responsibility, in particular as legal liability, is insufficient to cover the broad range of possible harms flowing from the risks. Policies to improve responsibility are discussed.