Updated: July 5, 2025

Key Points

• Drawing parallels with Acemoglu’s analysis of power and welfare inequalities in AI, I argue that blockchain is similarly susceptible to a drift toward private dominance. Like many previous technologies, it may have started as a public innovation good, but ultimately became dominated by private players once its applications became clear.

• While blockchain began as a rejection of traditional institutions, it has not escaped existing power structures. Rather, it has reconfigured them through token economies, founder influence, and venture capital.

• Constitutional governance offers a useful counterpoint: instead of advocating for traditional institutionalization, blockchain communities can design consent-based rules that limit capture and distribute voice.

This week, I have listened to the public discussion of Daron Acemoglu at Princeton University, “Power and Progress: Our Thousand-Year Struggle over Technology and Prosperity.”

Professor Acemoglu makes several interesting points in his discussion:

• Technology Isn’t Neutral – It Reflects Power Structures. The argument is that technologies mirror the institutional and political context in which they develop. Unless intentionally steered, they reinforce existing power imbalances, favoring elites over wider societal interests.

• A Thousand-Year Historical Perspective. Drawing on examples from the medieval era to the industrial revolution, he shows that technological change has often been manipulated by powerful actors to concentrate wealth and influence, rather than expand opportunity broadly.

• Inclusive vs Extractive Technological Paths. Professor Acemoglu distinguishes between the two types of technology regimes: Inclusive, where innovation empowers wide populations and leads to shared prosperity, and Extractive, where elites shape technology and entrench inequalities in access and growth potential.

• Targeted, Institutional Design Is Key. To shift toward more inclusive technology, policy can't be passive. Acemoglu emphasizes active, targeted institutional design: (i) Incentives for decentralized innovation, (ii) Promotion of openness and competition, and (iii) Governance structures that democratize tech development. I will follow up on this point a bit more below.

• Approximation of Past Mistakes to the AI Era. Professor Acemoglu cautions that unregulated AI risks replicating past mistakes: automation steered by corporate interests could worsen inequality. Instead, he suggests reimagining AI deployment from the top down, ensuring it enhances collective welfare.

• Toward “Power + Progress”. Acemoglu articulates a path forward by the formula “power + progress.” This approach requires coupling technological innovation with democratized power structures. Only then can progress benefit society at large, not just the few.

My Reflection

Listening about these pertinent issues of AI innovation, I couldn’t help but draw parallels with the development of blockchain technology.

Indeed, one can apply similar arguments to each of the emerging technologies of its time: computation and personal computer (1970s, boomed in 1990s), internet (1980s, boomed in 2000s), social networks (2000s, boomed in 2010s), blockchain (2010s, boomed in 2020s), machine learning (1960s, boomed in 2000s), and generative AI (2010s, boomed after 2022). Also, open-source software and peer-to-peer file sharing.

For one, the machine learning (AI) revolution did not originate within established industrial or government frameworks. Instead, it was driven by academics and university labs.

Similarly, the PC revolution of the 1970s and 1980s did not originate within established industrial or government frameworks. Instead, it was driven by hobbyists and enthusiasts (e.g., the Homebrew Computer Club), individual engineers and small startups (Apple, Microsoft, etc.), and countercultural ideals of empowerment and decentralization.

Ultimately, the blockchain innovation originated from developer enthusiasts, decentralized crowdfunding campaigns (e.g., ICO), and crypto punk open source movement.

The appearance of each of these technologies has created new, broader opportunities for improving the productivity of individuals and communities through easier computations (PCs), reduced search cost (internet, search engines), or low barriers to access to information (internet, in case of social information – social media).

However, the market forces always tuned in at the most burgeoning moment to reap the benefits. The market forces I talk about are commercial appropriation, competition, and the monopolization at the last stage. Market takeover typically occurs when the technology has matured just enough for the productive commercialization, e.g., the companies have figured out types of applications for consumers or businesses (B2C or B2B).

Under these market forces, the shaping of the future of technology is predominantly by heavily capitalized companies, rather than driven in the interest of the public. At this point, the inclusive innovative regime transforms into the extractive. It is worth mentioning that the inclusive-extractive spectrum is not binary but continuous: different technologies may have different inclusion-extraction proportions.

My point is that when institutional actors, such as firms, enter the technology development process, it creates a changing effect on the further course of technological development.

So, Where is Blockchain in It?

For a long time, after observing the blockchain industry (since 2017), I have observed and thought about the steering role of institutions in the technology development.

Major blockchains as Ethereum, Solana, Polkadot, Cardano, etc., noticeably have a non-profit foundation affiliated with them. Such a structure is not unusual for open-source software projects. However, on the other hand, major transformative technologies do not have a high penetration of open-source presence and decentralized developer participation either.

There may be nothing particularly new in the way blockchain has emerged and evolved. In fact, its trajectory mirrors that of the internet. The internet, too, began as a decentralized network with radical promise – initially nurtured by defense institutions, later adopted by corporate actors, and eventually embraced by the public. It was hailed as a public good, a connective infrastructure for all.

From a historical perspective, the trajectory of blockchain may not be as unprecedented as it first appears. Its inception and open-source development resemble those of previous technological transformations, most notably the Internet. Despite its status as a general-purpose technology with immense public utility, the development and governance of the Internet were shaped mainly by private capital and market incentives. Similar to the Internet, blockchain's core infrastructure evolves under the stewardship of private corporations, e.g., Tether or Coinbase. 

Despite the blockchain ecosystem differing in its ideological origin, the past patterns of the welfare distribution from the productivity created by the Internet can be informative for the possible pathways of its future development. While the Internet originated within government institutions such as the Department of Defense, blockchain arose as a coordinated exit from existing institutional structures. Nevertheless, the rapid development stage pattern is familiar: an early promise of decentralization and openness, followed by the consolidation of influence among actors with technical expertise, capital resources, and organizational capacity at the commercial application stages (see Figure 1 above). With the Internet, civic participation and public-sector governance have played marginal roles in shaping many of the productive applications of technology, such as social network platforms. A similar possibility for blockchain is looming, too.

This historical analogy raises a critical question: In the absence of intentional, inclusive design to promote the equal distribution of benefits from productivity, do emerging technologies inevitably reproduce ingrained inequalities under the guise of openness? The challenge of technological development is not merely resisting the capture of technology by private interests, but also proactively constructing governance frameworks that align innovation with broader public welfare.

Bright Future? Only If We Take Agency

As past historical precedent shows, in all past technological domains, public institutions were largely reactive rather than proactive. Regulation, education, and public-sector participation trailed far behind commercial adoption and infrastructure building.

However, we are not strictly confined by this trajectory only. Returning to Acemoglu’s argument, targeted institutional design may help shape technology with a better balance between the public good and commercialization perspectives – something we refer to as “responsible technology.” Such an approach has been applied to the regulation of monopolies (Sherman Act) or emergency help (911 service establishment).

No wonder that the “responsible technology” sentiment is widely discussed in the context of AI. We have missed the moment for social media. It was not an actual question during the Internet era (however, cybersecurity was an issue back then as well). So, what lessons can we derive from all previous waves of innovation?

The partial answer for the responsible technology framework will be the establishment of non-profit institutions that incorporate the voices of diverse user groups and, most importantly, incentivize participation in such governance.

Constitutional Governance Lessons: From Blockchain to AI

With blockchain technology, there is a decent level of volunteerism (e.g., self-regulation discussed in Nimalendran et al. 2024). First and foremost, as the blockchain technology development shows, volunteerism was primarily initiated by projects with institutional governance, e.g., non-profit foundations like the Ethereum Foundation, which combined their non-profit objectives directed to maintaining access to public goods and providing leadership in steering the technology in a responsible direction.

This perspective is cohesive with the idea of Buchanan’s constitutional governance. Buchanan’s view emphasizes the critical role of rules and institutions in establishing a framework for social interaction and protecting individual liberty. Unlike the top-down imposition of rules, Buchanan advocates for a consensual adoption approach.

It is worth noting that in this framework, legitimacy stems not from centralized authority but from the capacity of individuals to agree on the order of participation and distribution of benefits that bind their future actions. The availability of recognized institutions is important for flattening the distribution. The relevant dimensions of such governance design are inclusive, consensual, and stable rules to manage collective action problems.

From this point, blockchain does not lack institutions per se. On the contrary, mechanisms such as DAOs, token incentives, token-based voting, codified protocol treasuries, and irreversible on-chain governance can be viewed as early-stage constitutional arrangements – imperfect yet genuinely decentralized attempts to coordinate behavior and allocate resources. In this regard, blockchain technology is somewhat ahead of past technologies. What blockchain governance lacks is the standardization of the institutional model seen in projects with non-profit governance oriented toward maintaining the public good or communal DAOs. A key meta-rule of the public goods governance model, which incorporates distributed voices and is incentivized through tokens, is missing.

Without this meta-agreement, the trajectory of blockchain will take the regular extractive development path, increasingly dominated by concentrated capital and technical elites. AI technology has an even weaker adoption of the public goods governance mindset. 

Exploring possible solutions based on Buchanan’s views, one would suggest that we need better constitutional rules within the blockchain ecosystem that can prevent dominance by founding teams, whales, or corporate actors while preserving the voluntary and decentralized spirit of the technology. How can it be achieved? To answer this question, it may help to reframe the central dilemma: Rather than ask how public institutions can shape blockchain, it is worth asking how blockchain communities can build durable, consent-based institutions of their own – ones that keep their orientation for public interest in the long term and avoid reverting to coercive or hierarchical models of governance.