Scaling Up without Blowing Up: How Does the Bitcoin Collective Overcome Growth-Driven Conflict?

15.12.2022 12:00 – 13:00

MANAGEMENT BROWN BAG SEMINAR / SHORT ABSTRACT

Decentralized, non-hierarchical collectives such as open-source software development communities, networked activists, and decentralized platforms have become viable alternatives to traditional, hierarchical organizations for coordinating social and technological innovation. The growth of these collectives expands their number of members and scope of activities, thereby involving groups with increasingly divergent interests. As a result, the likelihood for conflict to erupt within the collective rises, constraining growth. Received wisdom predicts that non-hierarchical organizations are unable to resolve conflict effectively and will thus remain limited in scale; when they do attempt to scale up, they would eventually resort to a managerial hierarchy or fall into chaos. However, some decentralized, non-hierarchical collectives have indeed reached a grand scale despite growth-related conflict. This new phenomenon challenges received wisdom and calls for novel theorizing. We leverage a research opportunity presented by Bitcoin’s scaling war—a major conflict among various interest groups over if and how the Bitcoin collective should grow—to conduct a digital ethnography. We find that Bitcoin’s cultural and technological codes shape the characteristics of members and the interaction among them. These mechanisms are critical in not only preventing and resolving conflict, but also in maintaining the resolution as the collective further grows. The result of our analyses is a multi-stage theory, explaining the process of conflict management that allows decentralized, non-hierarchical collectives to scale up.

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