Blockchain Distributed Governance

Blockchain-Funds

This is a cross-post from the blog of the Centre for the Study of Governance & Society at King’s College London.

Over the last two decades online services have transformed from a product of a multitude of enterprises to being dominated by a handful of corporate-owned platforms such as Apple, Microsoft, Facebook, Google and Amazon. They specialize in connecting media producers to users. These are often mutual interactions with users both producing and consuming content. These platforms play an increasing role governing commercial exchange, as well as civil discussion, with plausibly pernicious implications for liberal democracy. As I propose in a recent paper ‘Markets for Rules’, blockchains offer a promising solution to this danger by helping to displace corporate ownership in favor of common platforms sustained by users themselves.

Corporate concentration has produced enormous efficiencies and innovations, improving user experiences and boosting investment in hardware and infrastructure. But it has also had several bad consequences. These enterprises face extremely low marginal costs and network effects whereby additional users add value to an existing user-base. Some of these effects are explained by these platforms’ business models of collecting personal data to target advertising more effectively at customers. The more interactions on a single platform users have with each other, the more useful the data for advertisers. The result is overwhelming returns to scale and a winner-takes-all competition for profits.

This has troubling implications for economic inequality, especially if we end up with a handful of corporations taking a bite out of every conceivable transaction. Of greater concern is the way owners exert control over who can join and what people are allowed to do on their platforms. Content producers can be demonetized or banned, effectively denying them access to a user-base or revenue. Online sellers can find themselves frozen out of a platform payment system without legal remedies. Controversial or unpopular producers survive at the whim of executives or, at best, a patchily enforced official policy.

This reliance on private governance is a problem for consumers, producers and ultimately citizens. But it is also a challenge for executives who find themselves mediating acrimonious personal disputes and political debate. With all the data in the world, they struggle to judge consistently what belongs on their platforms. The fact that these corporations have ended up functioning as unofficial censors and wielders of sanctions has led some commentators to propose regulating these platforms as public utilities or, more radically, nationalizing them so that access to them is decided democratically. These solutions have their own perils because any centralized system of monopoly control, whatever the underlying democratic credentials, can produce authoritarian outcomes. Liberal democracies up until now have been sustained by an independent civil society constituted by overlapping and competing spheres of governance, not the monopoly of either democratic or corporate government.

The prosecution of the CEO and founders of Backpage, who failed to exclude sex workers from their platform, illustrates the reliance of these private enterprises on government support on controversial policy issues even in relatively free societies. The combination of privately-developed data-collecting networks with over-arching state control is arguably reaching a nadir in China which is rolling out an unaccountable surveillance system of ‘social credit’ that can identify political dissidents and automatically exclude them from significant spheres of civil society.

Is there a way that blockchains can help navigate around the centralising and authoritarian impetus of technology-facilitated governance? Blockchains emerged from two pre-existing technologies – public ledgers and asymmetric cryptography – to produce a way of sharing data across a network that is resistant to manipulation by unauthorized actors. Initially conceived as offering alternatives to state-backed currencies, blockchains are now used to build decentralized autonomous organizations (DAOs) and dapps (decentralized apps). They can supply similar functions as corporate platforms but without an overall owner.

These systems are sustained by rewarding network participants with tokens (through completing intensive computing processes called mining). Tokens are convertible into ordinary currency, albeit currently at volatile rates. The entrepreneurs that build these platforms typically reward themselves and investors a large stake in those tokens but once the network is launched, they do not have control over how it is utilized. The rules of each network are self-enforcing. These rules can be changed, either through the original (or new) developers launching a rule-set that others may choose to switch over to (a fork). Alternatively, the rule-sets might contain provision for amendment. Such amendment schemes are, of course, open to manipulation as is the case for all political processes. Nevertheless, what these schemes offer is a way of interacting and exchanging at large distances without an overarching ruler. Instead, conduct is permitted on the basis of fixed rules enforced mechanically by people’s decisions to participate in the system. One way of looking at these schemes is that they have decentralized properties of communal norms, combined with the possibility of more deliberate design and experimentation of more formal rules and institutions. I call this common government.

The implications of this new technology and kind of governance might turn out to be very far-reaching, approaching that of the development of the Internet itself or even the printing press. But what could it mean for familiar Internet platforms in the medium-term? First, participating in mutual platforms might better align the incentives of users and platform designers. Right now, platform owners rely on squeezing as much data out of users as possible in order to sell it on to advertisers and to sell additional services. Mutual platforms, without responsibilities to shareholders, can experiment with different funding models. Individual users might elect to sell access to their profile to advertisers but the data itself can be made more secure as it will be a property of an encrypted network rather than a profile stored in a central private database. Privacy can be better assured than private management with public regulation.

Second, the networks can be more robust both to natural and political perturbations. Under decentralized protocols, ordinary users help store and serve content to each other. With the addition of blockchains, these users can be compensated for making their idle computer resources available for network use. This means that data doesn’t have to travel so far as is currently the case from host to user and the network as a whole can better cope with outages from particular nodes without data loss. Without a central controller, there is no particular agent that a government can coerce or punish for allowing specific interactions over a platform. Governments would then face the more difficult choice of permitting or prohibiting Internet communications altogether. It is thus more robust against arbitrary government censorship and manipulation of trade.

The relationship between users on a platform is mutual. The relationship between users and platform owners, however, is presently hierarchical – a private dynamic that government agencies can exploit. What blockchains may eventually permit is the provision of relatively efficient networks reliant neither on a single public agency nor private owner.

Learn more about Nick’s work here.

What’s the biggest takeaway from my Blockchain classes?

We are nearing the end of my first semester as a Blockchain lecturer at a local university. We have discussed many topics, such as cryptography, consensus protocols, tokenization, smart contracts, how to build your own crypto-token…

During the final examination, I have asked what their biggest takeaways are from my classes. Do you know what the biggest takeaway is among most students?

It’s that they will never look at government and money the same way again. None of them had heard of the word Libertarian before, but now they leave the classes a little more sceptical of government and hopefully a little more libertarian.

Timothy C. May, crypto-anarchist hero (1951 – December 15, 2018)

Tim May
Timothy C. May

News has arrived that Timothy May, the founder of the crypto-anarchist movement has died on December 15th, 2018. He has been a hero and inspiration for many in the crypto-anarchist/anarcho-capitalist community for his ideas to spread freedom and privacy through the use of cryptography.

Once an Intel senior engineer, he has written extensively about privacy, cryptography, and internet freedom. Without a doubt, he has been a great influence on the likes of John Perry Barlow (declaration of independence for cyberspace), Nick Szabo (smart contracts and Bitgold), Wei Dai (B-money), and Satoshi Nakamoto – the inventor of Bitcoin and blockchain. He has also contributed extensively to the Cypherpunks electronic mailing list, the same list that Satoshi initially used to spread his Bitcoin whitepaper and to invite cryptographers to join further developments of Bitcoin.

In his Crypto Anarchy and Virtual Communities (1994) paper, May describes Crypto anarchy as

the cyberspatial realization of anarcho-capitalism, transcending national boundaries and freeing individuals to make the economic arrangements they wish to make consensually.

He furthermore writes that

Digital cash, untraceable and anonymous (like real cash), is also coming, though various technical and practical hurdles remain. “Swiss banks in cyberspace” will make economic transactions much more liquid and much less subject to local rules and regulations.

Acknowledging the possible negative sides of crypto anarchism, May sees the development of crypto anarchism as mostly good. He believes that criminal activity within a crypto anarchist community are mostly exceptions and not the rule. He writes,

Is this a Good Thing? Mostly yes. Crypto anarchy has some messy aspects, of this there can be little doubt. From relatively unimportant things like price-fixing and insider trading to more serious things like economic espionage, the undermining of corporate knowledge ownership, to extremely dark things like anonymous markets for killings.

But let’s not forget that nation-states have, under the guise of protecting us from others, killed more than 100 million people in this century alone. Mao, Stalin, Hitler, and Pol Pot, just to name the most extreme examples. It is hard to imagine any level of digital contract killings ever coming close to nationstate barbarism.

Few mainstream news outlets today will write about Timothy May’s death and impact on our world, but for us who aspire to uphold Bitcoin’s initial principle to make (financial) freedom and privacy absolute, he will always be remembered for his inspiring contributions to secure our rights to life, liberty, and property.

Small thought on the fundamental revolution of Blockchain

Mankind made a huge leap forward regarding human organization when it implemented the Constitution. Man was no longer to be ruled by kings and despots, but by a document that stipulated the rule of law. Still, we had the issue of who was going to interpret these laws and who was allowed to add new rules.

Now, we have made another revolutionary leap forward in human organization. We don’t need a third party – kings, governments, courts – to interpret the laws anymore if we have self-executing smart contracts that eliminate the need to trust these third parties. Trust is established through mass collaboration and clever code. On top of that, everyone is free to opt-in, to submit new rules, and to participate in a set of rules. No one is forced to participate. You can always secede. We have had many secessions in the blockchain space. Bitcoin Cash seceded from Bitcoin Core, Ethereum seceded from Ethereum Classic etc. It is therefore a peaceful means to organize human beings.

This is, in my opinion, the fundamental revolution of blockchain: a peaceful trust machine for social agreements and human organization.

Blockchain trust

Opportunities for blockchain-based social media in developing countries

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On September 22nd, I presented my Serey project – a blockchain based social media platform in Cambodia – at BitFest 2018 in Amsterdam. It was organized by the BitShares Foundation and mainly attended by enthusiasts of BitShares and Graphene technology. Being part of the Bitshares/Graphene family, I was invited to speak at the conference.

We shared the stage with other graphene projects as BitSpark, DasCoin, PayGer, BitCrab, RuDEX and many others. I look forward to work together with anyone that seeks to decentralize our future, that has a vision in which every human being is free, and where blockchain technology provides the tools to secure our rights to life, liberty, and property.

Stan Larimer was there as well, and he had something interesting to say about how BitShares will import EOS technology through a middle-layer. This will greatly benefit the whole BitShares/Graphene community, including Serey.

Regarding my own presentation, I have made the case that Blockchain is not only a technological revolution, but essentially a social, political and economic revolution. I believe it’s a tool that will move us into a more decentralized world that was envisioned by the earliest internet adopters. As more internet applications were built, it became clear that it would not become as decentralized as these adopters hoped. These applications suffered from a centralized system in which data was stored and controlled on a single or a small number of servers. Those who controlled these servers, the men-in-the-middle, dictated the rules of the platform. They could look into your data, modify your data, prevent you from accessing your data etc.

Blockchain eliminates these so-called “men-in-the-middle”. Its censorship-resistant property provides many great opportunities for developing countries where the rule of law are often weak or underdeveloped. One opportunity that I have been trying to seize in Cambodia is the creation of a social media platform that could not be controlled or censored by a single party. As Cambodians are becoming more tech savvy, and more connected to the outside world through internet access, it’s a great time to roll out a Blockchain-based social media platform where people can express themselves freely. The advantage of a social media is that it’s easier to build the network effect that can reach critical mass in a relatively short period of time. Once we gain enough momentum, I would like to tokenize the national currency, the Riel, develop a Serey Wallet, and provide anyone who has access to the internet the opportunity to open a wallet (bank account) for free and use our tokenized Riel for e-commerce, remittances, savings, loans etc. Although Cambodia has experienced tremendous economic growth in the past two decades and the World Bank has moved Cambodia’s status from a lower-income bracket to a lower-middle-income bracket, 83% of Cambodians still remain unbanked.

Doing so, I hope we will promote freedom of expression and an intellectual society in Cambodia, as well as help banking the unbanked.

Below, you can find my slides for the presentation.

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The promise and peril of blockchain distributed governance

neoliberalthoughtcollective

I was very fortunate to learn that my essay ‘Markets for rules‘ has won the Mont Pelerin Society’s 2018 Hayek essay competition for young scholars (one of the perks of academia is being defined as young well until your 30s). I am now looking forward to presenting at MPS’s famous conference, originally organised by F.A. Hayek to build the post-war intellectual case for liberalism.

The essay is an attempt to explain the governance possibilities of blockchain technology through the lens of new institutional economics and more specifically private governance. Blockchains allow people to develop rules that can then be enforced autonomously by the participants that use them without further central direction. This could allow communities to rely more on common rules and less on formal coercive authorities to achieve widespread social cooperation. I am cautiously optimistic about the technology (it could also turn into a dystopian nightmare) though not any particular currently existing blockchain.

Here is the abstract: Classical liberals seek the paradoxical: government powerful enough to protect individuals from preying off each other, but limited enough to prevent it becoming a fierce predator itself. The emergence of blockchain technology heralds a potential revolution in our collective capacity to implement limited government. Blockchains offer a more secure and transparent way of implementing rules while permitting individual choice between rulesets that can co-exist at the same time and place. What this could ultimately mean is that a great deal of what we have traditionally conceived to be governance might be disintermediated from the territorially defined monopolistic coercive authorities that classically define states.

Serey: a Cambodian blockchain-based social media platform inspired by Friedrich Hayek’s theory of dispersed knowledge

www.serey.io

Serey is a new Social Media platform that specifically targets the Cambodian market. The country that saw nearly a quarter of the population decimated during the civil war of the 60’s and 70’s, the Khmer rouge regime, and the subsequent famine, has gone through rapid economic developments in the past two decades due to its friendliness to free markets. Accompanying this development is the adoption of new information technologies. One such technology is blockchain.

The team behind Serey has now created a blockchain-based social media platform called Serey. It rewards content creators, such as writers, for their creativity. The platform now has 400-500 users who all contribute by writing content ranging from short fictional stories to history, philosophy, and technology. Users can post any content they want. There is no central authority that can censor the posts in any way. The system is based on a democratic voting system in which every user can vote on articles. Dependent on the votes, the content creators are rewarded with the platform’s native cryptocurrency called Serey coin (SRY).

What does Serey stand for? 

The name of the platform, Serey (សេរី in Khmer), is derived from the Khmer word seripheap (សេរីភាព) which stands for liberty or freedom. The platform is built on the philosophy of liberty and is inspired by Friedrich Hayek’s theory of dispersed knowledge. Realizing that every individual knows just a fraction of what is collectively known and that our collective knowledge is therefore decentralized, Serey is looking to encourage the sharing of the unique information that individuals possess through the Serey platform. It wants to create an open platform where everyone is free to enter, to exercise their creativity without fear of being coerced into silence or conformity, and to engage in thoughtful, civilized discussions.

There was no such online platform in Cambodia yet. Cambodia, at this moment, also doesn’t have a culture of reading and writing. Serey is aiming to transform this so there is also an educational component to it.

We need to learn to dance with our feet, with ideas, with words, and, need I add that one must also be able to dance with the pen?

The mission statement of Serey is as follows:

“Rewarding self-expression and creativity.”

Why is Serey run on a blockchain?

The Serey blockchain allows the storage of content – actually only the actual text of the article and no pictures or videos to keep block sizes minimal – in a distributed manner. Anything written on Serey is stored on a blockchain that is shared among many other servers, called witnesses, that run an exact copy of the blockchain. This makes all content tamper-proof and censorship nearly impossible. This is in line with Serey’s belief that everyone should have the right to free expression.

In addition, a blockchain serves the people’s right to keep the fruits of their labour. Serey cannot take away any of its users Serey coins. All earnings are rightfully theirs and they can spend it in any way they want.

What are the features of Serey?

Serey is principally a fork of Steemit – another social media platform on the blockchain – and therefore essentially makes use of the Graphene technology that also powers Steemit and Bitshares. However, whereas Steemit is trying to create a one-size-fit-all approach with their platform, Serey is entirely dedicated to the people of Cambodia. They believe that regional differences require different user interfaces and functionalities that match the people’s cultural makeup and level of sophistication with blockchain technology.

Compared to Steemit, Serey has a different layout, a market place section, a Khmer language option, an free advertisement section, and a simplified reward system.

The Serey Decentralized Exchange is currently under development and will offer an English and Khmer language option.

In addition, the Serey Decentralized Exchange is currently being built in cooperation with developers close to Steemit and Bitshares. It will be a full-fledged decentralized exchange that is accessible by anyone, anywhere in the world. Users will then be able to trade Serey coins (SRY) among 15-20 other cryptocurrencies such as Bitcoin, Ethereum, Dash, Bitshares etc.

Other features that Serey users can look forward to in the next six months are an online betting system, improvements of the market place section, an integrated chat feature similar to that of Messenger, and a mobile app.

If you are interested in Serey, please feel free to visit the website and to register for free. Most articles are written in Khmer, but English articles are welcome as well.