Unruly Innovation: Distributed Ledgers, Blockchains and the Protection of Transactional Rents

We present a new conceptual model of disruptive innovation and apply it to distributed ledger technology. Our analysis illustrates the new features of this technology and why there is an argument that, in several respects, the combination of distributed ledger technology and cryptographically enabled contracts changes the economic framework within which individuals, firms and policy makers reside. This foundational level of disruption appears to have several new features, more notably a fundamental change in the game played by economic actors: the ability to self-deregulate. The paper provides a simple, but precise description of a series of complex interactions and illustrates the main points using a recent case study from the Distributed Autonomous Organizations of the Ethereum project.