Industrial Management & Data Systems

With a little help from the miners: distributed ledger technology and market
disintermediation
Efpraxia D. Zamani, George M. Giaglis,
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With a little help from the miners: DLT and market

disintermediation
distributed ledger technology and
market disintermediation
Efpraxia D. Zamani 637
School of Computer Science and Informatics,
Received 31 May 2017
De Montfort University, Leicester, UK, and Revised 14 August 2017
George M. Giaglis Accepted 8 October 2017

Department of Management Science and Technology,

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Athens University of Economics and Business, Athens, Greece

Abstract
Purpose – The purpose of this paper is to argue for the role of the blockchain, i.e., distributed ledger
technology, in building innovative business models, including machine money, autonomous economic agents
and decentralised organisations.
Design/methodology/approach – The paper is conceptual/argumentative. As such, it draws on research
on (e-)commerce, theories of markets, disruptive innovation and extant studies and conceptual work at the
intersection of cryptocurrencies, machine-to-machine commerce and the Internet of Things.
Findings – The authors highlight three application areas for blockchains, whereby they can function as
applications, can help develop autonomous economic agents and can lead the development of decentralised
autonomous organisations. With regards to the question of market disintermediation, the authors suggest
that, rather than complete disintermediation, the most probable scenario is that of new types of intermediaries
finding previously unthinkable roles to play in mediating blockchain-based economic transactions.
With regards to the inhibitors that slow down the technology’s adoption and, therefore, the development of
new business applications, the authors posit that these relate mainly to the inherent risk of the technology,
infrastructure requirements, scepticism of early decision makers and the lack of required new skills
and competencies.
Originality/value – The authors examine how new forms of digital money and technologies embedding
trust in decentralised networks will alter markets and commerce, at a time when many regulatory issues
remain unresolved; in doing so, the authors focus on how blockchain-enabled technologies can be used to
enable and further develop decentralised trusted peer-to-peer transaction ledger systems and applications and
lead to sustainable business models.
Keywords Disintermediation, Disruptive technology, Blockchain, Distributed ledger technology,
Smart contracts, Distributed autonomous corporations
Paper type Conceptual paper

Introduction
The role of a market lies in bringing together and matching buyers and sellers, facilitating
transactions and providing the necessary institutional infrastructure, where the first two
functions are supported by intermediaries, and the latter by the government (Bakos, 1998).
Along these lines, transacting within a market means, among other things, that the buyer is
exchanging something for something else, at a fixed or arranged price, that both parties
agree to the terms of the exchange and that the exchange can be monitored and documented
(Fligstein and Calder, 2015), e.g., that there exists a ledger of transactions.
Today, buyers typically use fiat (state- or central bank-issued) currency to buy products
or services. Such transactions may be cash based or cashless, meaning that buyers may use
Industrial Management & Data
Systems
Vol. 118 No. 3, 2018
This research is partially funded by the Athens University of Economics and Business, through the pp. 637-652
“Action 2: Support for postdoctoral researchers” and the “Original Research Publications” research © Emerald Publishing Limited
0263-5577
funding programs. DOI 10.1108/IMDS-05-2017-0231
 IMDS debit and credit cards, or conclude their transactions through third-party applications, such
118,3 as PayPal, Apple Pay or Google Wallet. In all cases, there is money involved, with a
sovereign issuing the currency in which transactions are finally settled. Further, no matter
how the transaction is actually concluded (cash or cashless), there is some sort of
documentation, as the supplier can either provide a receipt for the exchange of cash for
goods, or the card issuer, the escrow service or other intermediary keep track of the cashless
638 transaction.
Within this context, one cannot but take note of the disruptive technology of
cryptocurrencies that has led to the production and use of money that are algorithmically
generated through a decentralised process. This process entails that “miners”, i.e., the
members of a peer-to-peer (P2P) network, process transactions with the use of specialised
software and hardware. In return for their services, the network rewards them with newly
generated cryptocurrencies. The arrival of cryptocurrencies has already made strides in
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many different fields and the financial industry is already seeing some of the effects and
engaging with the technology. For example, several banks, such as HSBC (2016) and RBS
(Creer et al., 2016), have started developing proof-of-concepts and central banks are
exploring regulatory issues (e.g. European Central Bank, 2012).
It is thus timely to examine how this form of new digital money will alter markets and
commerce. In this paper, we posit that cryptocurrencies and the underlying technologies
that make cryptocurrency-based transactions possible, such as the distributed ledger
technology (DLT) (also known as blockchain), will lead to the development of new business
models. Coupled with the advent of the Internet of Things (IoT), we consider that these
technologies will help develop previously unthinkable applications, including even
organisations without human workers, where all business is conducted by and between
distributed network-connected machines or blockchain-based smart contracts.
If implemented at scale, such actors will enter the economic arena as independent agents
engaging in machine-to-machine (M2M) transactions, gradually leading to a new wave of
market disintermediation akin to that witnessed in the early years of e-commerce.
The paper is structured as follows. In the next section, we discuss the nature of
cryptocurrencies and that of the digital ledger technology to show how they can act together
as the equivalents of traditional money and ledgers. Next, we identify possible applications
of the distributed ledger and how market disintermediation will (and will not) happen in
such applications. Following that, we discuss possible inhibitors that can slow down the full
adoption of the DLT for everyday commercial applications. The paper concludes with
remarks regarding threats and opportunities, as well as ethical considerations.

The elements of commerce

While the concept of commerce originally referred to the interaction of two or more parties
coming together for the exchange of, e.g., ideas (Barnett, 2011), today it has come to refer to
the exchange of commodities, either for other commodities or for money. In this sense, the
main elements of commerce would be the existence of a buyer and a seller, the need for a
particular product or service, an agreement between the parties regarding the value of that
product or service and an agreement on the medium used for the exchange, i.e., how much
money the product is worth and in what currency the buyer is going to pay for it. Gradually,
third parties started mediating interactions between buyers and sellers; as markets started
getting bigger and more complex, intermediaries took up the role of matching buyers with
sellers, making the exchange of information regarding products and services easier, and
supporting payment and transaction processes, whereby the involved parties trust the
intermediary with, e.g., the settlement stage (Bakos, 1998). While intermediaries play a
strong role in e-commerce, there is also room for market disintermediation due to decreasing
search and transaction costs (Giaglis et al., 2002).
 In this respect, we consider that cryptocurrencies, such as Bitcoin, together with its DLT and market
underlying technology, the blockchain, and blockchain-based applications, like smart disintermediation
contracts, all combine to introduce a strong aspect of further decentralisation and
disintermediation. As such, they can accelerate the move towards ubiquitous commerce;
they provide the means for businesses to develop new products and services, and at the
same time, lay the foundation for the development of new types of businesses, i.e., fully
decentralised autonomous organisations (DOAs). Within this context, we posit that there 639
will be little room for transaction intermediaries, at least in their existing form and nature.
In what follows, we describe in more detail how the main elements of commerce have
changed through the aforementioned technologies in order to explicate how commerce itself
is shifting. These matters are discussed in tandem with how these changes make possible
new business application areas.
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Are cryptocurrencies money?

There are two main theories of money today, commodity theories and claim theories (Bryan
and Rafferty, 2007). Both deal with the nature of money, its source of power and its role
within society, directly or indirectly. Unsurprisingly, these theories derive from and are
frequently discussed within the fields of economics and social theory (Lawson, 2016).
Commodity theories see money as being valuable because money in itself is a valuable
commodity, for example, a precious metal, or even work labour (Hampton, 2013). According
to claim (or credit) theories, something is exchanged for credit, whereby the value of credit is
not linked to another commodity, but on the value assigned to it by the creditor (Innes, 1913).
In this case, money is valuable because institutions (e.g. a state), surround that money with
assurances of trust, acceptance and stability, and its power emerges from the fact that the
state “determines what will be accepted in payment as taxes” (Bryan and Rafferty, 2007,
p. 148). As such, the creditor, i.e., banks and states take focal role by issuing and
controlling money.
A discussion on the nature of money involves what functions money needs to fulfil in
order to be considered as such. Historically money has acted as a medium of exchange, a
unit of account and store of value. Lawson (2016) argues that, like everything else, money is
socially positioned, and that anything that can be a reliable and transferable form of value
while fulfilling the previously described functions, can act as money. Indeed, Bryan and
Rafferty (2007), arguing for the role of derivatives as money, underline that the definition of
money has to be flexible because the number of things that can essentially act as money has
thus far proven to be endless.
Cryptocurrencies, like Bitcoin, Ether and Litecoin, are a form of digital currency made
possible by cryptography. Encryption techniques are used to issue the units of the currency
and to verify the transfer between parties, entirely independently from central banks, states
or other intermediaries. In this sense, they are completely decentralised (Böhme et al., 2015)
and near anonymous (Meiklejohn et al., 2016). Because coin production is algorithm based,
there is a fixed supply of cryptocurrencies and a transparent creation policy. In addition,
because the entire process is based on distributed computers and because some
cryptocurrencies are stored in offline devices (e.g. external hard drives) that may be
destroyed over time, some of the cryptocurrencies that were once in circulation have already
been lost or more will be lost in the coming years (Sauer, 2016).
Recent studies have focussed on whether cryptocurrencies, and Bitcoin in particular,
can in fact be considered money or represent value. Cheah and Fry (2015) argue that, much
like other fiat currencies, Bitcoin, too, needs to provide a level of confidence to its users, be a
unit of account, and have value in order to be seen as money. In their study, they conclude
that Bitcoin exhibits none of fiat money’s characteristics due to significant fluctuations in
its price, that it is vulnerable to speculative bubbles and that its fundamental value is 0.
 IMDS Legal wise, the question of whether cryptocurrencies are money remains unanswered, as
118,3 there are different court rulings across different countries. In the Netherlands, for example,
in a 2014 court case the ruling was that Bitcoin is more of “a commodity-like medium of
exchange” rather than typical money, as it could not at the time fit any of the known
definitions of money (Ramasastry, 2014). In September 2016, a federal court in New York
decided that Bitcoins are indeed money because “[they] can be accepted as a payment for
640 goods and services or bought directly from an exchange with a bank account. They
therefore function as pecuniary resources and are used as a medium of exchange and a
means of payment” (Fortune, 2016). Another important thing worth mentioning is that the
UK government recognised Bitcoin as a form of digital cash in one of its reports regarding
cryptocurrencies (Government Office for Science, 2016) and that Japan has recently accepted
it as a legal payment method (Garber, 2017).
Going back to the functions of money, we consider that cryptocurrencies, regardless of
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the exact type, exhibit some of the characteristics of regular money. They are a medium of
exchange because cryptocurrencies can provide a measure of value, and, because they are
recognised and accepted for transactions, they are being exchanged for goods and services
and have eliminated the need for barter. They act as a unit of account, and as with regular
money, their exchange rate fluctuates depending on inflation/deflation and supply and
demand, as cryptocurrencies can be exchanged for other currencies, such as dollars, euros,
etc. Therefore, inflation and deflation do hamper cryptocurrencies’ ability to store value, but
this holds true for all currencies; we thus see no difference between cryptocurrencies and fiat
money along this function. They act as store of value because once created, cryptocurrencies
are then verified and ultimately transferred to their owners’ digital wallets, where they can
be stored until exchanged. Further, the value stored is portable, is divisible into nano-units,
and identifiable (all peers of the network can attest to the production and transfer of that
particular coin and no other). Finally, they can be used for settling a debt ( form of payment
or standard of deferred payment), as they are used for payments, although still not widely.
The differences we detect between cryptocurrencies and fiat money is that the former are
independent from a central bank, a sovereign or an institution, being produced and handled
by a distributed network of peers. As money is created and used by societies, it is considered
a social institution; therefore, it needs to adapt to the context and “the character of the
times”, which includes any technological advances (European Central Bank, 2012, p. 10).
Cryptocurrencies may “fall short of the legal concept of currency or money” and may not be
able to “completely fulfil the three economic roles associated with money” (IMF, 2016, p. 16),
however, some cryptocurrencies (e.g. audiocoins) are actively used as money more and
more. As such, they inescapably have a place within contemporary markets and we consider
that they can ultimately substitute or complement fiat money, at least to some extent.

Documenting transactions in a distributed ledger

While cryptocurrencies constitute an important technological advancement themselves,
we consider the DLT, also known as blockchain, more significant because it holds greater
potential to disrupt business and commerce areas beyond money. Traditional ledgers are
paper based or digital files that help with documenting transactions, such as accounts paid,
outstanding balances, etc. The DLT creates online, distributed and publicly available
ledgers that are updated by every node of a P2P network. This is based on the consensus of
the nodes, with the use of a proof-of-work or similar consensus algorithm, and without
the mediation of a trusted third party. This means that the nodes, i.e., the peers or the
miners, agree which “block” should be added next on the “chain”, forming eventually
the blockchain.
Distributed ledgers are secured through public key cryptography. Transactions refer to
hashes of the public keys of the peers involved in them and are cryptographically signed by
 the sender. Further, each transaction is referenced on the blockchain and time-stamped, DLT and market
therefore no coin can be transferred twice and the transaction with the earliest time-stamp is disintermediation
considered the valid one in case of grievance (Papp, 2015). In other words, once a transaction
has taken place, there is evidence and the necessary safeguards that the specific digital
“coins” and no other have been transferred, and therefore cannot be used again, even
momentarily for other transfers (Dierksmeier and Seele, 2016). As a result, the overall
infrastructure is more secure compared to other types of digital transfers (Hari and 641
Lakshman, 2016).
Along these lines, the importance of the DLT is that the business logic (i.e. the rules) can
be set at the level of each individual transaction (Government Office for Science, 2016); this
being distributed across several geographically dispersed locations and shared among
different participants, all of whom have access to an identical copy of the ledger, means that
improper use of the ledger can be detected by any of the peers. In other words, the DLT
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helps in developing trust between otherwise unknown and untrusted peers. It further means
that, as the DLT operates in a similar fashion to traditional ledgers, together with
cryptocurrencies it can be used for settlements. As a result, escrow services, credit card
issuers, etc., are no longer relevant for the secure flow of money, because the DLT introduces
a form of digital, collective bookkeeping (Westphal, 2015).
Notwithstanding, thanks to the DLT, smart contracts, i.e., code, embedded on the
blockchain, can be executed according to rules predefined and programmed within them.
The concept behind this is that the smart contract self-executes if and when pre-
programmed conditions are met (Kosten, 2015); therefore, a smart contract may control the
timing of a transaction, the permissions of an account or the lifecycle of a document, among
others. While they are not ordinary contracts, they act as such by enforcing the conditions
under which an action should take place, and reinforcing a trust environment within which
parties may transact without the reassurances of intermediaries.

The DLT and new business applications

We posit that the DLT is set to disrupt the way commerce is conducted today. The
technology allows for transactions to be carried out using programmable money, verified
and validated by the consensus of a P2P network, and for software to proceed with initiating
such transactions (monetary or otherwise) without human mediation. All these take place in
a distributed, decentralised fashion, where transactions cannot be intercepted, forbidden or
modified by any one state or financial institution, in a fully anonymous manner; this means
that ownership of any amount of cryptocurrencies cannot be connected to any one
individual, transactions cannot be traced back to parties involved. Most importantly, this
suggests that trust to the currency is embedded within it, rather than ensured by an issuing
body. In other words, the technology distils trust across each and every node of the network
by design. The end result is that one can create a strong “accounting” system, free of its
weak points, i.e., sin of commission, sin of deletion, sin of omission (Mainelli and Smith,
2015), as the network is enriched “with the desired mix of transparency and anonymity, and
a ledger of records history which cannot be changed or altered” (Kosten, 2015, p. 13).
Using cryptocurrencies instead of fiat money, coupled with the DLT and smart contracts,
can and has already changed the nature of money and commerce. Within traditional
commerce environments, the market comprises of the buyer, the seller and the intermediary.
In the early days of electronic markets, studies suggested that this setting would change
and that intermediaries would be removed from the market, as the very structure of
e-commerce left little room for them: both buyers and sellers were experiencing lower costs,
and the market were allowing them to transact directly with one another. Yet, fast forward
some years later, intermediaries succeeded in providing value-adding functions that could
not be easily replaced (Giaglis et al., 2002). With the advent of cryptocurrency technologies,
 IMDS we see new opportunities along the dimension of disintermediation. What we witness is that
118,3 we are being led to the disintermediation of payment systems, where there are almost no
costs involved for concluding a given transaction. For the first time, there are the conditions
for buyers and sellers to communicate directly, and transact safely and securely without a
third party needed to establish a secure communication between the two. Gradually, the
decentralised nature of these technologies will mean that those functioning today as
642 intermediaries may see their role shrinking considerably. Chief among them would be
banking institutions, states and, generally, the heads of hierarchically driven organisational
systems (Government Office for Science, 2016).
However, we do not consider full disintermediation to be a possible scenario, as this
would require businesses to operate their own DLT. Rather, it is likely that this will lead to
new roles for intermediaries. Presently, the DLT is an attractive technological solution when
the requirements include proof of ownership, trade ability and trust among the participating
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actors with the aim to achieve real time transactions, increased reliability and resilience to
external threats. As a result, we consider that intermediaries may still have a role to play
within a blockchain-enabled environment. Building on Giaglis et al. (2002), we foresee three
different outcomes:
(1) The disintermediation outcome, where existing intermediaries will be driven out of
value chains, just like intermediaries were driven out of supply chains due to
e-commerce. Blockchains will create an Internet of Trust, where traditional trusted
third parties (such as governments, banks, lawyers, notary services, etc.) will see
their role diminish in blockchain-backed commercial transactions.
(2) The reintermediation outcome, whereby existing intermediaries will attempt to build
on their experience, expertise and market positioning in an attempt to find new
business opportunities to remain relevant. For example, banks could substitute their
existing processes for tracking mortgage payments and concluding cross-borders
and cross-bank payments, with blockchain-based processes.
(3) The cybermediation outcome, with new intermediaries entering the market, offering
previously unthinkable services to transacting parties in DLT networks. This may
refer to intermediaries acting as DLT service providers (Manning et al., 2016),
offering Blockchain as a Service (BaaS). For the recipients of such a service, the
benefits would be similar to those of cloud computing, whereby the burden of
the infrastructure and maintenance are taken up by the provider, thus allowing the
customer to focus on its primary business activities.
Along these lines, we consider DLT to create numerous opportunities for the development of
new application areas and business models, and we speculate that these underlying
technologies are much more promising and disruptive in nature. In what follows, we discuss
these in further detail.

Money as application
Money can now have properties that can be stored within a smart contract. In our
understanding, this opens up three different scenarios: there can be application-specific
money, that can be used as credit or token within specific applications; money can have an
expiration date or money may be governed by specific depreciation rules; and money can be
used as value tokens or rewards.
Application-specific money, or money-over-IP, may be perhaps the most straightforward
application, as in essence it entails the use of cryptocurrencies as actual money.
Application-specific money can be used as tokens for concluding certain tasks, as, for
example, sending and receiving e-mails over a network, conducting nano-payments and
 offering rewards for specific services (e.g. community service). Money-over-IP will be used DLT and market
to bypass traditional intermediaries. In the case of a business, money-over-IP brings down disintermediation
payment barriers and facilitates borderless commerce (Antonopoulos, 2016), whereby
settlement can take place without commission fees and the risk of volatile exchange rates, as
cryptocurrencies, such as Bitcoin, are universal. In the case of individual users, we see
cryptocurrencies as having great potential for the “unbanked”. In many occasions, people
are unable or unwilling to access the services of financial institutions (due to, e.g., lack of 643
acceptable credit history, lack of local branches and desire for independence).
This essentially means that a proportion of individuals (approximately 11 per cent in
high-income countries and 59 per cent in developing countries in 2015 (CGAP, 2014)) do not
own a bank account. Yet, in many countries, the unbanked leverage ICTs, such as
smartphones, to send, receive and store money. M-Pesa, for example, allows users to access
such services through text messaging in return for a small fee. This service could be made
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available over the Bitcoin network, as “digital wallets” for mobile phones already offer these
functionalities in real time, over a more secure network that is always available, with much
lower fees (Darlington, 2014). The same scenario is applicable to expatriates and migrants
for the purpose of international money transfers.
In the previous examples, there appears to be little to no room for an intermediary.
Indeed, users are able to send and receive cryptocurrencies from one address to another
without the need for the services of a third party. Yet, many individuals, particularly those
who are less technologically savvy, may see a benefit in accessing such financial services
through an easier to understand interface, without getting into the particulars of
cryptocurrency-based systems. Therefore, while an intermediary is not always essential,
digital wallets can operate as the new intermediaries offering third-party support
(cybermediation scenario).

Autonomous economic agents

Based on already available technology, it is possible to create autonomous economic agents
who send and receive money-over-IP, i.e., application-specific money in the form of some
cryptocurrency, for their transactions. Such autonomous economic agents may take the
form of autonomous vehicles, independent certification agents (e.g. academic degrees,
national IDs), or even simple computers. Within this context, the computer or the software
essentially will own itself and will be able to bid for passengers, process one’s file or bid for
leasing processing power, respectively; in turn, their payment would be in cryptocurrencies,
later spent on, e.g., their maintenance (Aron, 2014) or simply handed over to their
human owner.
In all cases, with the emergence of DLT and the advent of programmable money, there
are now the necessary conditions to actually transact in nano-quantities of regular money.
This means that new business models can be created around the emergence of new M2M
applications. For example, idle computers can be used within a network for machine
learning purposes, by leasing over their processing power and the necessary resources and
getting paid in cryptocurrencies. Based on blockchain principles, logistics may be
revolutionised completely. The participants of a supply chain can leverage the distributed
ledger for documenting transactions (monetary or not), movement of products and settle
payments, with each participant having access to the same blockchain. Essentially, this
would mean that all actors will be able to communicate with one another in real time, over a
trusted network, having automated many parts of their processes, and experiencing
lower costs.
We see further possibilities within this scenario. Within the realm of IoT, this new form
of money, together with autonomous agents, opens up new streams of business. Every day,
more and more IT devices and household appliances come equipped with internet
 IMDS connectivity, sensors and actuators. These appliances and devices need to interact with each
118,3 other and conduct transactions in order to be truly “smart” and part of the IoT; in this
scenario, as others have noted, a washing machine can start sourcing its detergent on its
own, without its owner’s intervention, and pay for it in cryptocurrencies (Stark, 2016). While
this may be a fairly simplistic use scenario, it does point to other more sophisticated
scenarios where artificial intelligence and the IoT can lead to even more innovative business
644 models if enriched with the concept of DLT. For example, hailing a taxi can take the form of
an auction where autonomous agents may proceed with the bid if certain conditions are met,
e.g., gas consumption is below certain level (Giaglis, 2015). In other words, DLT can support
autonomous vehicles in becoming fully autonomous agents that are able to optimise their
functionality by exchanging information among them (Gerla et al., 2014), being vetted
against predefined criteria and being equipped with a transaction mechanism for
settlements. Within the logistics realm, where tracking informs many processes (e.g. recalls
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and payments), DLT can streamline the entire supply main and make it more responsive
and cost-efficient. For example, upon the receipt of a shipment by the warehouse, a smart
contract may be executed, initiating the payment process in real time, with all the necessary
documentation being sent over a secure network to those involved.
In the previously discussed examples, we see reintermediation and cybermediation
equally relevant and possible. With regards to traditional intermediaries, such as for
example banks, we consider that they will expand their services portfolio to include
blockchain-based applications for settling payments and that these will be successful by
being able to capitalise on pre-existing trust-based relationships between them and logistics
actors. Further, regulatory bodies and other governmental organisations will remain
pertinent for the logistics field. However, their relationship with the involved actors can
become more efficient; logistics businesses can build on smart contracts technology to
automate their processes most affected by regulatory aspects, such as recalls, where
traceability and tractability are of importance.

DAOs
Cryptocurrencies together with DLT and smart contracts provide the infrastructure for the
development of corporations that are fully digital and distributed and, for the first time in
history, even entirely autonomous. Cryptocurrencies provide the payment method for
transactions, DLT provides verification and validation of these transactions, while smart
contracts can be the mechanisms that trigger transactions, essentially setting the entire
corporation in motion when certain conditions are met.
DAOs are not an entirely new concept; they first appeared on a conceptual level in 2011
(The Economist, 2014). However, coupled with other technological advancements, such as
autonomous agents, the possible applications of DAOs may be endless, as there can be
“pre-programmed” businesses (Aron, 2014). For example, a DAO may be a digital land registry
office, where the blockchain and autonomous agents substitute the notary. The Swedish
Government has already begun testing the application of DLT for this (Chavez-Dreyfuss, 2016).
Since DLT is in essence a ledger of time-stamped transactions, it can be used for documenting
property ownership at any given time, which is verified and validated by a network of trusted
peers and is characterised by increased transparency, as the ledger itself is distributed,
synchronised and available to thousands of computers. In a similar fashion, the Estonian
Government uses DLT for developing a Keyless Signature Infrastructure, which is secure and
transparent and allows citizens to verify that all government records about them are accurate;
because this infrastructure cannot be compromised, it means that the information can be
successfully used for digital governance (Shukla, 2016).
Other benefits emerging from the application of DLT within the context of DAOs is that
because no single peer can alter any transaction without other parties noticing, the
 possibility of fraud can be diminishes significantly. In addition, because DAOs operate DLT and market
through autonomous agents, no single entity is entrusted with the management of the disintermediation
corporation. In other words, considering that when power is centralised, it allows for greater
corruption, DAOs may be seen as going against power accumulation, by providing a flat
network for trusted application and transactions (Antonopoulos, 2016). We thus posit that
DAOs will introduce new ways of governing corporations that are flatter, less hierarchical
and where the power structure is, too, decentralised and distributed across the many nodes 645
of the network (Kypriotaki et al., 2015).

Factors that inhibit full implementation

The success of disruptive technologies lies in that, among other things, they manage to
introduce new business models and support new products and services that are
significantly cheaper, better, convenient and more desirable than their predecessors
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(Kostoff et al., 2004). However, what needs to be stressed is that, for any technology to be
considered successful, it needs to be fully developed and implemented, to get adopted beyond
the confines of a niche group, and to be commercialised; in other words, the technology needs
to move from the conceptual phase into actual use.
While cryptocurrencies and the supporting technologies are already in use by several
businesses and individual users, the full impact of the blockchain has yet to reach the
business world due to a series of factors that inhibit its wide adoption. In order to sketch out
some of these inhibitors, we adopt Assink’s (2006) model of disruptive innovation inhibitors
and trace its dimensions against the DLT.
Assink identifies five clusters of inhibitors that limit the full implementation and
performance of disruptive innovations, that relate to adoption, mindset, risk, nascent and
infrastructural barriers. On an abstract level, these inhibitors may be considered as
pertinent and applicable to any new technology that is considered for adoption. In what
follows, we discuss how these inhibitors affect the adoption of the blockchain technology.

Adoption barriers
Within the cluster of adoption barriers, the main inhibitors have to do with pre-existing
designs, and organisational inertia (Assink, 2006), which lead into unwillingness to change
from the dominant paradigm (Herbig and Kramer, 1993). With regards to cryptocurrencies,
DLT and smart contracts, all three of them were indeed developed so as to replace long
established solutions; chief among them Bitcoin, with the dominant design being fiat
currency. Specifically for large corporations, seeking to develop new use cases or improve
existing ones through blockchain-based applications, they will need to do so by challenging,
on the one hand, the status quo within them (because they will need to reengineer business
processes, adopt different approaches for doing things and so on and do forth), while, on the
other hand, seeking to cause minimal disruption on their day-to-day business. However,
when there are existing technologies, e.g., electronic payments, credit cards, CHAPS
payments, as alternatives, it is quite likely that organisations will be hesitant to do so.
Indeed, while many large financial institutions have started engaging with the blockchain,
they are still at the stage of discovering its possibilities and nurturing it into business
propositions, having yet to enter the stage of commercialisation, which requires
organisational learning, unlearning and relearning (Beck and Müller-Bloch, 2017).
Generally, we consider that a cost-benefit analysis may support the decision-making
process, through which organisations can make an informed decision as to whether
substituting legacy payment systems with blockchain-enabled ones could be beneficial for
their clients and themselves.
One more barrier that we see as belonging within this cluster is the usability, or lack
thereof, of the technology. Conducting everyday transactions, and buying and selling
 IMDS cryptocurrencies, is nowadays fairly straightforward. There are many different mobile
118,3 applications, being a metaphor for the traditional wallet, and numerous exchange platforms
exist, used by less and more experienced users. However, from the viewpoint of the average
user, understanding the underlying structure and parsing the encryption principles that
are useful for transacting safely and securely, is a very complicated task and limits the
proliferation of the technology. On the one hand, using cryptocurrencies for paying at a
646 regular point of sale may be simple, although not always as fast as using cash or credit
cards (Lo and Wang, 2014). Further, not all transactions can mimic “regular money”-like
transactions; for example, while the buying process is more or less the same, getting a
refund is entirely different. For the Bitcoin case, if a transaction has been broadcasted to the
network, then by design it cannot be reversed unless the other party agrees to it.
If transactions are conducted through escrow services, there is the chance to settle
grievances through the escrow service, usually during the period over which funds are held
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by the escrow. Therefore, because the technology cannot mimic the full range of regular
transactions, and because thus far, using it as an alternative for all transactions is not easier
from using its predecessor, we posit that low usability levels have an impact on its adoption.

Mindset barriers
While organisational learning is important, unlearning and relearning are also significant.
These relate to how organisations and individuals break free from their own assumptions so
as to identify the possibilities of the disruptive innovation and eventually reject old
paradigms (Sinkula, 2002). It also highlights that organisations often hesitate to shift focus
from their developed expertise, and concentrate on building new in fear of losing their
competitive edge (Assink, 2006). Further, research suggests that the more radical the
innovation, the greater the change is in the technology (Cabanes et al., 2016); this means that
the possibility of requiring new knowledge, new skills and competencies is higher.
Therefore, as a first step for the case of DLT, organisations need to become more flexible,
in the sense that they will need to start working on different areas that may be uncertain and
often risky. While doing so, they have to assess whether they are short of the right talent for
identifying use cases, developing prototypes and pilots and moving them to full
development and commercialisation. In addition, as it happens with the blockchain
technology, the necessary competencies are found at the cross-road of cryptography,
finance, business process and information systems, which are rather difficult to be found in
combination. As a result, organisations need to source new talent or identify existing from
within them, whose skillset spans across these disciplines.
Further, we consider that the way through which organisations attempt to overcome
mindset barriers will play a role in whether reintermediation or cybermediation occur.
Assuming that traditional intermediaries lack the necessary set of competencies to compete
within the blockchain field and fail to secure them, this will leave ample room for new
players to enter the market by offering more competitive products and services. These may
take the form of payment systems and third-party applications offering lower transaction
fees for cross-border payments, more intuitive interfaces between client and provider, and so
on. Similarly, if traditional intermediaries succeed in unlearning and relearning, they will be
able to leverage their expertise and expand their portfolio of services so as to include
blockchain-based offerings.

Risk barriers
Disruptive innovations introduce high levels of uncertainty as they create, most often, areas
and applications previously unknown and unforeseen. Such uncertainty creates a lot of risk
for organisations, because organisations need to invest significant resources, both financial
and human, in order to experiment with the technology and nurture their ideas. Further,
 they are not able to predict whether there will be a demand for the future products and DLT and market
services, whether these will be successful or better than their precursors, and, in the end, disintermediation
whether there will be a return on their investments (Assink, 2006).
In this respect, the blockchain technology presents quite a challenge for most
organisations, irrespective of their particular profile. It comes with demands for new
competencies, and new development methods, it is meant to be a substitute of several
traditional alternatives, all of which have to be seamlessly integrated within the 647
organisation and combined with pre-existing structures. At the same time, those working in
the area need to find successful use cases, and get the buy-in of different divisions from
within their organisations, so as to secure high-level support (be it financial or otherwise).
As a rule of thumb, we consider that the risk barriers may be minimised if these new and old
use cases can get leaner with the help of the blockchain rather than over the legacy system,
i.e., they need to capitalise on the privacy and transparency offered by DLT, they require an
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increased level of trust among the nodes of the network and operate on the basis of proof of
ownership, and where ownership is loosely interpreted into permission to create, store and
edit data on the blockchain.

Nascent barriers
Within the cluster of nascent barriers, Assink (2006) identifies, among others, the lack of
creativity and foresight, and the innovation process mismanagement as important
inhibitors towards capitalising on disruptive innovations. Lack of creativity relates to
organisations, particularly large ones, being unable, or less prepared to support
breakthrough ideas and individuals or teams to diversify on pre-existing solutions
(Ahuja and Morris Lampert, 2001), which is nevertheless invaluable for developing and
commercialising radically innovative products and services. Foresight is also necessary to
predict what may create new markets or respond to needs that are not yet fully formed.
Development that responds to current needs rather than envisaged ones (e.g. developing
products based on focus groups and user studies) may be a barrier for innovation (Verganti,
2009), which can prove costly, particularly for high-tech businesses, who, as a result, may
lose their market positioning (Christensen, 1997). Notwithstanding, management-related
aspects are also crucial. Working with disruptive technologies requires the buy-in of key
members from across the organisation, and from those responsible for allocating resources,
be it financial, human, time or otherwise.
Along these lines, we consider that the single most important inhibitor for the adoption
of the blockchain technology is the inability to effectively manage the innovation process,
because on the one hand it brings together all other aspects of the nascent barriers cluster,
while on the other, in order to be considered as innovating with the blockchain
environment, a business will need to go beyond the mere replication of a legacy system
using blockchain applications and tools. In Beck and Müller-Bloch’s (2017) study on an
investment bank that is currently an incubator, the innovation process was supported
early on by senior executives, with an acute interest in the technology, who were
encouraging and driving it across the organisation. The discovery stage, i.e., when the
organisation begun identifying opportunities, was inspired by the need to solve problems
that could not be solved with existing tools and led by enthusiasts, creative enough to see
the applicability of the technology in a different area. All the while, management was
aware of the uncertainty, the involved risks and the possibility of not being able to extract
value out of this endeavour; yet, financial resources were committed, external expertise
was acquired, and stakeholders were involved so that use cases and reengineered
business process remain relevant. Taken together, the organisation managed to create the
appropriate environment for innovation and to move from the discovery to the incubation,
and eventually to the acceleration stage.
 IMDS Infrastructural barriers
118,3 The infrastructural barrier aims to underline the lack of regulation, standards, processes,
distributors, markets and the likes, which are required to make the disruptive innovation a
fully commercialised product (Assink, 2006; Walsh and Linton, 2000). This is particularly
pertinent for blockchain-enabled technologies and applications.
The adoption of DLT is, almost by definition, not a single organisation’s decision.
648 Conversely, it takes a network of businesses to decide to cooperate on a blockchain-based
infrastructure. Network effects and perceived compatibility (or lack thereof ) with existing
internal IT systems may all play a role of inhibiting early adoption decisions by such
networks or clusters of users. The lack of a genetic, interoperable infrastructure to support
seamless DLT adoption at a cross-organisational setting will therefore be a significant
barrier to early adoption of the technology and its applications. It is also probably the reason
behind the current attempts of many large technology providers (such as IBM or Microsoft)
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and industry consortia (such as R3 in the financial services industry) to set up and provide a
standard, interoperable set of infrastructure services to interested users.
Next, distributed ledgers may be permissionless or permissioned, or hybrid (Wust and
Gervais, 2017). Being permissionless means that the blockchain is decentralised,
anonymous, open to everyone and results in rise in trust within the technology.
The permissioned model is closed to outsiders, and monitored by the owner who grants
access to participants based on their profile. In this scenario, trust develops as a result of the
monitoring and emerges out of the owner. They are usually developed by organisations or
consortia of organisations (hybrid); as a result, they serve a specific purpose and are
governed by specific rules. Most importantly, they require significant funds for their
development and for medium or small organisations may make no financial sense to invest
in developing a private or hybrid blockchain of their own. However, this barrier may be
overcome through third parties, whereby an intermediary can surface as blockchain
provider for many smaller organisations, offering BaaS as a hybrid solution, i.e., a partially
decentralised blockchain, by creating economies of scale.

Conclusions
In this paper, we have examined how cryptocurrencies, DLT and smart contracts can be
combined to unleash a new era of commerce. As Wörner et al. (2016) show, many companies
leverage cryptocurrencies to innovate, and that in doing so, they manage to create new
markets and/or remove central authorities from the equation. Other businesses are more
focussed on the DLT, experimenting with proof-of-concepts or use cases, and are at the
verge of moving to the acceleration stage, where a full business proposal gets drafted and
exploitation activities begin (Beck and Müller-Bloch, 2017). Within this line of thought,
we believe that the focus should be placed on how these technologies can be used to enable
and further develop decentralised trusted P2P transaction ledger systems and applications
(Giaglis and Kypriotaki, 2014), and lead to sustainable business models (Wörner et al., 2016).
However, for that to be possible, the technology needs to overcome a series of obstacles
that prohibit its full commercialisation. As our analysis shows, there are adoption, mindset,
risk, nascent and infrastructural barriers. These are not independent from each other, but
rather interact and are interdependent for the most part. Blockchain technology requires
that organisations come up with new ways of doing business and in doing so, they will need
to consider abandoning old paradigms, possibly successful ones, and developing new
competencies. To do so, it is necessary that senior management develops an understanding
of DLT’s possibilities and creates a supportive environment, where the innovation process
may flourish.
Like all technological innovations, this comes, too, with opportunities and risks.
What we have described in the previous sections fall within the category of M2M and
 human-to-machine commerce, where financial transactions are ultimately facilitated by DLT and market
the existence of digital money and ledgers. Such scenarios open up numerous disintermediation
possibilities and benefits; for example, a cryptocurrency payment system can be literally
programmed, and it will be possible for computing devices to bid for each other services,
through the use of smart contracts. This means that ultimately, computers can
participate in auctions, whose outcome may be based on the most efficient allocation of
resources, while the DLT can provide for cryptographically proven transactions and for 649
maintaining the anonymity and the security of all parties.
With regards to the risks and the ethical considerations, for the time being financial
institutions and governments appear to be in the process of devising ways of taking
advantage of the DLT and considering ways of regulating its use (Subramanian and Chino,
2015). Given the near-zero transaction costs of cryptocurrency-based payment systems,
existing business models are now being challenged and new opportunities emerge. The
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distributed nature of computers over networks that communicate with each other and
transact without the intervention of humans, coupled with technological advances that
occur each and every day, may create a future where humanless organisations can very well
be a reality. As the members of the network can remain fully anonymous, without clear
regulation that governs cryptocurrencies, cryptocurrency-based payment systems may be
used, and are already being used, for criminal activities, such as money laundering. This
further gives rise to ethical considerations and how this technology can be used for illegal
activities (Dierksmeier and Seele, 2016; Hurlburt and Bojanova, 2014).
Another extension relates to the development of humanless corporations DOAs, in
these scenarios, offer their services to other parties of the network, without the mediation
of human agents, but only autonomous agents are involved and in control of the
interactions and transactions. This may sound dystopian, as emerging technologies, like
DLT take over in the name of development and growth, and efficiency (Atzori, 2015). We
acknowledge the ethical and moral considerations behind the full deployment of
cryptocurrency-based payment systems and the use of DLT for creating humanless
corporations, whereby autonomous agents can substitute humans. However, we do not
consider that this will necessarily lead to a dystopian future, as we see this to be
dependent on the use context. While removing social interactions from some contexts,
such as the educational or the health care one is certainly harmful, a DAO can be quite
beneficial in sectors with rigid forms of transactions and in financial contexts or where
records, registers and voting procedures are required and have to be strictly monitored
(Reijers and Coeckelbergh, 2018).

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About the authors

Efpraxia D. Zamani is a Lecturer of Information Systems and a Member of the Centre for Computing
and Social Responsibility at De Montfort University, UK. Her interests are found at the intersection of
organisational and social aspects of information systems, with an emphasis on post-adoption user
behaviour, enterprise information systems and blockchain applications. Her research work has been
presented in numerous conferences and has been published in journals such as the Journal of
Information Technology and the International Journal of Electronic Commerce. Efpraxia D. Zamani is
the corresponding author and can be contacted at: [email protected]
George M. Giaglis is a Professor of e-Business in the Department of Management Science and
Technology at the Athens University of Economics and Business, Greece and Director at the Institute for
the Future, University of Nicosia, Cyprus. His main research interests are electronic business,
emphasising on the design, development and evaluation of innovative mobile, social networking and
business applications, and social network analytics, focussing on data mining, user modelling and social
learning behaviour in online social networks. He has published over 150 research articles in leading
journals and proceedings of international conferences, including Information Systems Journal,
International Journal of Electronic Commerce and International Journal of Information Management.

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