Who is Liable for Collusion in Cryptocurrency Protocol Development?

Abstract

Cryptocurrencies are based on cryptography-based asset disposals broadcasted peer-to-peer to be validated decentrally according to consensus mechanisms in compliance with consented protocols. Protocol development is associated with risks, and there are conflicts of interests. Collusion involving protocol developers may increase such risks. This paper explores liability for collusion in cryptocurrency protocol development. It is found that liability gives some, but not sufficient, protection against harmful collusion.

Keywords: Blockchain, Cryptocurrencies, Collusion, Liability, Open Source

JEL Classification: E42, G28, K21, K24, L17