Bitcoin as a Sustainable Polycentric Digital Infrastructure

Conceived in 2008, Bitcoin is a domain-specific digital infrastructure designed as a peer-to-peer (P2P) cash system. In particular, its unique technological characteristics and the collective efforts of a global network of miners and developers position Bitcoin as a polycentric digital infrastructure. Being a domain-specific polycentric digital infrastructure, Bitcoin faces specific challenges regarding its capacity to be sustainable, as traditional polycentric sustainability practices may not fully align with its domain-specific design. This Ph.D. thesis aims to investigate the sustainability practices within Bitcoin by examining how its unique characteristics affect its sustainability as a domain-specific polycentric digital infrastructure. The research is structured into four distinct Research Papers, each focused on investigating Bitcoin’s stakeholders. Together, these papers provide a comprehensive analysis of Bitcoin’s sustainability, examining the interplay between miners, developers, and end users and the peculiar challenges faced by the Bitcoin network. Research Paper 1 identifies six main factors driving Bitcoin’s adoption among end users—a fundamental factor for its long-term sustainability. Research Paper 2 continues the focus on the number of end users by empirically examining the relationships between end users, developers, and miners. Findings indicate that a higher level of activity among miners and developers is associated with an increased number of end users. Research Paper 3 addresses specific challenges that miners face regarding their sustainability and focuses on the impact of layer 2 technologies on the number of end users and the overall security of Bitcoin. Findings show that increased activity in these technologies is associated with both a higher number of end users and enhanced security for Bitcoin. Research Paper 4 examines the organizational practices within the community of developers and finds that Bitcoin’s community-based structure, decentralized economic resource distribution, meritocratic and consensus-based governance model, and communication channels help mitigate the risk of organizational centralization. This Ph.D. thesis contributes to the current academic literature by analyzing how Bitcoin, as a P2P cash system, functions as a sustainable polycentric digital infrastructure. First, the identification of two additional sustainability practices, labeled “the layering approach” and “the censorship resistance approach”, enriches the academic discourse on digital infrastructures. Specifically, these contributions advance the dialogue surrounding the sustainability of polycentric digital infrastructures. Second, the introduction of an alternative metric, the number of end users, as a principal measure for analyzing P2P cash systems and digital infrastructures in general, thus shifts the focus away from financial indicators. Third, the demonstration that P2P cash systems are influenced by complementary externalities suggests that their sustainability depends not only on their core characteristics but also on the interplay with other complementary technologies. Finally, the thesis establishes that the organizational approach within a P2P cash system is as crucial as the technological approach for achieving sustainability. The primary organizational goal is the creation of a censorship-resistant system, which helps to mitigate the risk of centralization from an organizational perspective.