What Is Blockchain Governance?

To understand blockchain governance, we need to first get a fair idea of what the word governance means, read on to know more.

Humans tend to interest each other and build tribes, villages, town, cities, or empires. With that comes societal norms among those who are living with or near each other. These rules have different ways of pending into existence. It doesn’t matter if the governance is the real world or the digital world, there are shared underlying principles within both.

These principles are: Rules, Rulers, Participants.

Governance can be commenced by a government, market, network, or social system (family, tribe, development team, etc.).

For a governance procedure to work successfully, the above three principles will need to play nicely with each other. For example, the rules should be aligned with the overall participants’ goals, and the rulers should enforce positive and negative actions within this governance structure. Now that we have a basic and simple understanding of governance, let’s see how this is taking place in both the typical world and the blockchain world.

Blockchain Governance

All organizations and software advancement projects need a way to agree on and to finalise each decision along the roadmap. Most organizations are centralized and have a leadership team. Several strategies for governing the decentralized blockchain have been developed.

Effective blockchain governance includes:

Incentives

Methods of coordination

Before diving into the niceties of how governance works on blockchains, it’s significant to have a clear meaning of what blockchain governance is. Every blockchain is a growing system which needs to change to meet the needs of its users. If a blockchain isn’t relevant and useful, then it won’t survive, it needs to be able to evolve and adapt. To evolve, the blockchain needs to make changes and needs a way to make final decisions on what these changes should be. Organizations usually have a leadership team or a CEO who is the final authority for their organization. However, blockchain is designed to be decentralized in its nature, and not be under the regulations set by any person or group. This means that blockchain needs another way to make decisions regarding the blockchain’s roadmap.

So, blockchain governance in order to be effective, it needs to include both incentives and methods for members to coordinate. Without incentives, members won’t participate in governance and the blockchain will become less aligned with user needs over time. Without a method for members to coordinate, it will be impossible for a blockchain network to come to an agreement on future changes.