Limitations of trust and legitimacy in blockchain: exploring the effectiveness of decentralisation, immutability and consensus mechanisms in blockchain governance

• Date: 12 November 2024
• Pages: 98-117
• DOI: https://doi.org/10.1108/IJPSM-12-2023-0368
• Published date: 12 November 2024
• Subject Matter: Public policy & environmental management,Politics,Public adminstration & management
• Author: Dion Curry

Limitations of trust and legitimacy in

blockchain: exploring the effectiveness

of decentralisation, immutability and

consensus mechanisms in

blockchain governance

Dion Curry

Department of Politics, Philosophy and International Relations, Swansea University,

Swansea, UK

Abstract

Purpose –This paper examines to what extent blockchain creates legitimacy and trust in different modes of

public governance. It posits that while blockchain aims for political legitimacy through decentralising,

immutable and consensus-based mechanisms, the execution of these mechanisms is limited in legitimating

governance, which has knock-on effects on trust. It provides an original contribution by recontextualising and

reframing blockchain as a governance mechanism that should, and must, perform a legitimating function in

order to engender trust.

Design/methodology/approach –The research adopts a comprehensive framework for understanding the

legitimacy of blockchain governance, positioning it in terms of co-governance, self-governance and hierarchical

governance modes. It systematically analyses blockchain whitepapers, legislation, government documents and

other sources in three paradigmatic case studies where blockchain governance failed. These cases are then used

to assess blockchain according to three key characteristics of decentralisation, immutability and consensus.

Findings –The research finds that blockchain’s use in governance settings still relies on legitimacy conferred

from other sources – namely state – in order to generate trust. Significant limitations in its de facto political

decentralisation, immutability and consensus protocols can create failures in co-governance, self-governance

and hierarchical-governance applications, thus limiting the legitimation function of blockchain in facilitating

political trust.

Originality/value –These findings are significant in highlighting blockchain’s limitations as a decentralised,

immutable and consensus-driven legitimating tool, which has knock-on effects on trust in technology and

governance more broadly.It also has broader implications in more clearly highlighting the interconnectedness of

political trust and legitimacy in governance processes.

Keywords Governance, Legitimacy, Trust, Blockchain

Paper type Research paper

Introduction

There is something quaint about the current hysteria around blockchains, in that they embody a

touching belief that software will somehow provide a remedy for the untrustworthiness of people,

institutions and government in our modern world. (Naughton, 2022)

Significant debate about blockchain revolves around the nature of trust – arguing whether it is

“trustless” (Nakamoto, 2008), a shift from trust in individuals to systems (Werbach, 2018) or

whether it is a “confidence machine” (de Filippi et al., 2020). At the same time, it is argued that

blockchain can create fairer and more legitimate governance mechanisms such as voting

systems, social income redistribution and public works projects (Chow, 2022a;Buterin, 2023).

However, blockchain’srole in engendering trust by creating legitimacy through its governance

structure is not explored in great detail. This paper argues that in order to create trust,

blockchain must be seen as legitimate and perform a legitimating role in governance. It intends

to fill a gap by examining not whether blockchain creates trust or confidence, but how this trust

is created (or not) by perceived legitimacy in blockchain governance. In other words, it

IJPSM

38,1

98

The current issue and full text archive of this journal is available on Emerald Insight at:

https://www.emerald.com/insight/0951-3558.htm

Received 18 December 2023

Revised 4 March 2024

29 April 2024

12 August 2024

1 October 2024

Accepted 2 October 2024

InternationalJournal of Public Sector

Management

Vol.38 No. 1, 2025

pp.98-117

©Emerald Publishing Limited

0951-3558

DOI10.1108/IJPSM-12-2023-0368

reframes the debate on blockchain around whether, and how,it is legitimated, and legitimates

governance functions. The key research question the paper addresses is:

To what extent does blockchain create legitimacy and trust in different modes of

governance?

This paper contends that it is not trust that is important in blockchain, but rather the legitimacy

that potentially creates trust in the system. Blockchain aims to address the “supply” side of

trust by creating a new legitimating mechanism by which trust can be conferred, but its

approach to trust needs to match up to the “demand” side of trust based on legitimate authority.

By examining paradigmatic case studies of blockchain governance in different governance

modes – the Ethereum hard fork (self-governance), decentralised autonomous organisations

(DAOs) (co-governance) and China’sBlockchain-based Service Network (BSN) (hierarchical

governance) – the paper argues that blockchain’s use in governance settings still relies on

legitimacy conferred from other sources in order to be trusted by the public.

This research addresses key practical and academic considerations in our understanding

of blockchain. The paper’s main contribution is conceptual and theoretical, examining

blockchain through the lens of governance modes to identify how it shapes or affects

traditional conceptions of legitimacy in governance. It examines the relationship between

blockchain, trust and legitimacy, and further develops this connection by extending the

focus beyond governance of blockchain to examine blockchain’s effects on legitimating

governance itself. It provides an understanding of blockchain’s effectiveness as a governance

mechanism, including the actors, responsibility and accountability necessary in these systems,

a gap identified in previous literature (Lapointe and Fishbane, 2019;Nascimento et al., 2019,

p. 106; Lustig and Nardi, 2015). Practically, blockchain is touted as a unique political solution

that “promotes the empowerment of citizens . . . can improve transaction cost efficiency

. . . [and] can democratise data and improve trust and transparency” (European Parliament,

2018). This paper makes a contribution by looking at whether these assertions play out in

practice.

The paper first explores conceptions of trust, legitimacy and governance as they relate to

blockchain. Through the lens of governance modes, the paper then explores three paradigmatic

cases of blockchain governance in practice as examples of co-governance, self-governance

and hierarchical governance: DAOs, the Ethereum hard fork and China’s BSN, respectively.

The paper concludes by assessing the legitimising functions performed by blockchain as a

decentralising, immutable and consensus-driven technology and the implications this has for

blockchain use in the public sector moving forward.

Theoretical background and literature review

Blockchain as a technology is essentially a distributed ledger, where information is recorded

on a series (or chain) of data blocks, where each block is connected to each other in a chain of

information (for a summary of the technology, see, for instance, Kassen, 2024). Blockchain, as

a distributed ledger technology, has several key characteristics. First, it is decentralised and

distributed, with the former meaning power and decision-making is disbursed, and the latter

meaning that the technology is also dispersed across nodes. Blockchain is immutable, in that

any changes, once made, cannot be reversed. Finally, blockchain is consensus-based, in that

changes to the blockchain need to be agreed by some mechanism to take effect (Zachariadis

et al., 2019, p. 109). Given these characteristics, its use in public administration and

governance has expanded where it can theoretically fulfil many government and governance

functions, from identification, personal records, land title registries and contract management

to financial services, voting, providing benefits and streamlining bureaucratic processes across

agencies and sectors (Berryhill et al., 2018, pp. 25–28). However, its use in these settings can

affect how decision-making, consensus, accountability, control and organisation of

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