Governance

In crypto, governance refers to politics. It is a structure that intends to meet the needs of and protect the blockchain’s participants and blockchain itself that every network participant agrees to follow. As with any economy or government, governance’s primary objective is to align interests and beliefs among human participants to reach consensus. It is common for some crypto blockchains to use “on-chain” governance to make decisions. This might require network users to execute a transaction to “vote” for or against a proposal. However, there is always an informal “off-chain” process that occurs on the human level, where a person operating a node may choose to ‘vote’ by shutting off their computer. While on-chain governance tends to be transparent but rigid, off-chain governance can be opaque and imprecise, yet more adaptable to unforeseen circumstances. Though blockchains do rely on some level of social consensus, formalizing the parameters on-chain and mandating transparent actions makes blockchain governance politically and technologically innovative.