Blockchains, trust and action nets: extending the pathologies of financial globalization

Abstract

Blockchains combine digital encryption and time stamping technologies to enable digital exchange to occur in manners celebrated by proponents as ‘trust‐free’. Yet, an increasing range of scholars argue that actual applications of the peer‐to‐peer technology shifts, rather than eliminates, trust. In this article, we draw on organizational theory to argue that efforts to remove trust reorganize the action nets that underpin payment systems in manners that extend rather than eliminate longstanding pathologies afflicting financial globalization. Our analysis supports and extends the critiques that blockchain applications are far from ‘trust‐free’. By tracing how efforts to reconfigure the socio‐technical composition of the humans and objects that underpin payment systems, we illustrate how blockchain applications shift the location and character of the technical vulnerabilities that create market instabilities and concentration, as well as elite‐led governance.

Factors Affecting Trust and Acceptance for Blockchain Adoption in Digital Payment Systems: A Systematic Review

“…The blockchain concept was first developed by Satoshi Nakamoto in 2008 [4,22,34,35]. It is a decentralised distributed ledger system that is immutable and append-only [35].…”

“…Trust plays a crucial role in adopting and utilising technological services [3,[19][20][21]. Trust is a pivotal factor in the consumers' inclination to embrace technologies and services [22] as it aids in mitigating perceived risks and uncertainties associated with them, hence augmenting customers' levels of acceptance and intention to adopt [23,24]. Another critical component that must be considered before adopting innovative technologies is the acceptance of users [2,9,25,26].…”

The epistemic evolution of market authority: Big data, blockchain and China’s neostatist challenge to neoliberalism

“…For example, governance of cryptocurrencies such as Bitcoin inheres in a form of charismatic authority, founded on the presumed credibility of technical expertise. Whilst cryptocurrencies based on distributed ledger systems may shift the locus of trust from central banks as apex monetary institutions to decentralized technological systems, they nevertheless neither eliminate the need for trust to be secured on a multi-layered basis (Bratspies, 2018), nor ameliorate the problematic political implications of such trust mechanisms, instead coming to reflect many of the political pathologies already evident in financial governance (Campbell‐Verduyn and Goguen, 2019).…”

Global networks of money and information at the crossroads: Correspondent banking and SWIFT

“…Against this backdrop, the overarching aim of this paper is to shed light on how informational (messaging) and financial (settlement) geographies structure global flows of money. Financial infrastructures have been somewhat of an analytical blind spot, but recent contributions have begun to (in‐)form a more coherent conceptual embrace (Brandl & Dieterich, 2021; Campbell‐Verduyn & Goguen, 2019; de Goede & Westermeier, 2022; Dörry et al., 2018). We build on these contributions by (1) examining evolutions in account‐based money to highlight the separation of information and settlement processes, and to show the contingency of the architecture of global banking on this money form, and (2) examining these dual intertwined processes and geographies in the CB infrastructure for cross‐border payments, which helps to tease out the ‘social fabric’ and its organization that define the working of financial infrastructure.…”