EBGS — Episode 1: Adapting to Changes
The Interaction Between Reality and Blockchain
Note: After much thought, I decided I wanted to restructure how I approached the writing of this subject (Brief, related essays rather than comprehensive, deep-dives). The previously stated, upcoming episode: Blockchain Administration and the Use of Discretion, will be pushed back to a later episode and possibly fragmented into multiple episodes.
Governance: Freedom of Mobility
The first issues I wish to explore are the major structural and human obstacles that blockchain governance will need to acknowledge in order to develop responsibly at scale.
If you are new to the subject, I hope that you appreciate the abstract nature in which you will receive this exploration. Keep learning, because it’s a fascinating technology. This exploration is part of a continuing learning process for me on the use of technology in real-world governance.
Technology itself has always been somewhat deterministic in that, whatever you can imagine it being used for is inevitably explored and implemented if possible. This technology is no different, and the potential use of this technology for improved methods within real-world governance processes should be aggressively pursued in the attempt to develop a comprehensive, secure, and reliable form of e-Government from which every nation can model from.
However, we must be able to distinguish the governance of our realities and the governance of a new technology stack. Most of our discussions around governance are centered around the benefits or limitations of either on-chain governance or off-chain governance. In both instances, the governance being described is about the decisions made and implemented on the blockchain; a change to the protocol that will have an impact upon anything and everything built on top of it.
This is what we are all striving to understand: how do we develop a decentralized on-chain governance system that is independent from the influence of centralized institutions and off-chain processes? Largely, this will apply to public-permissionless blockchains, as other types may desire off-chain processes or centralization.
If we want to develop a path toward decentralized on-chain governance, we must emphasize and understand the differences in our approach toward the governance of a blockchain and the governance of our daily lives. In reality, we are governed by highly centralized institutions — which depending on where we live, have vastly different structural functions that impose significant influence on our social and economic relationships. For the majority of us, we are extremely passive when it comes to the rules that govern our everyday lives. In some countries, your freedom to buy a car, drive a car, or rent a car is limited to whatever decisions are being made within the governance structures that you claim citizenship within. In Saudi Arabia, women were just granted their right to drive; in North Korea, an individual must obtain a permit from the state if they desire to drive alone; in the United States, car rental companies can deny you service depending on your age. There are numerous laws which we passively abide by, simply because we perceive ourselves to have no choice in the matter.
Whether we agree with these rules as self-sovereign individuals is of little concern because we lack the mobility and the authority to escape the governance structures in which we were born into. Our ability to migrate between governance structures is extremely limited in the real world as we are bounded by social and cultural networks, education, language, legal frameworks and extreme economic deficits. Mobility is a human right; one that has historically been under strong centralized control.
If we want to approach this subject responsibly, the fulcrum of decentralized governance structures should be built upon this weakness. Mobility is a right which should be granted to every user of a blockchain (economic) protocol. The ability to “move across” various protocols, and therefore governance systems should be the centerpiece of any decentralized governance framework, and a metric by which platforms compete for new users. This digital world, where not only information is shared globally, but now, value — demands that users (miners, node-operators, end-users, coin-owners, developers, distributed-applications themselves, etc.) maintain their ability to choose the governance systems that best reflect their values and priorities and which are in-line with their incentives.
Bitcoin Maximalism
Bitcoin maximalism is the belief that the current deficits (scalability, smart contracts, governance, etc.) within Bitcoin will one day be remedied and Bitcoin will prove to be the supreme exemplar of blockchains, resulting in an unbreakable monopoly of economic activity. This notion is absurd.
However, for all of those who agree, I believe it is necessary to ask ourselves the following question: Do we consider Bitcoin maximalism absurd because we don’t think it’s possible, or because we know it’s undesirable?
Bitcoin maximalism is possible; and highly likely in the absence of dissenting voices. However, it isn’t desirable for many reasons; especially in terms of developing a healthy governance framework. In fact, I believe that the lack of a reliable governance framework within Bitcoin is one of many limiting boundaries to its scalability. The use of the Bitcoin blockchain at such a scale and in the absence of competition requires a pre-requisite expansion of infrastructural capabilities, the addition of new stakeholders, modified and expanding functional roles, and a global constituency whose economic well-being depends on the operation and security of a single network.
The extreme differences in culture, values, language, and our general mentalities towards living are reflected in our economic behaviors and are therefore set up to clash constantly within a single dominant blockchain structure. Without significant improvements in coordinating processes and methods, attempting to govern a global monopoly will be met with chaos, indecision, manipulation and eventually a chain split (I mean, the Segwit2x proposal completely divided an objectively small community).
I bring up Bitcoin maximalism, not because I disagree with the philosophy behind it (which I do), but because it illustrates one of two distinctive organizational structure outcomes for us to explore at this scale: an economic community within one dominant network, or an economic community spread across multiple networks.
Within our Bitcoin maximalist universe, we have successfully scaled and governed the expansion of complex smart contracts, distributed applications, and increased the value of the network by orders of magnitude. In this scenario, I will assume governance has been figured out completely and there is no further need to disrupt such a utopian environment.
However, the alternative is that Bitcoin maximalism is absurd, and there will be many economic platforms (protocols), with very different currencies and distributed applications that are governed independently of one another; and who are competing through their governance structures (among other variables) for the migration of users to their protocol.
The challenge for this industry is going to be designing blockchains that “lean-in” to what they are, and serve that function responsibly without the desire to become something more. Expanding the functions of a protocol diminishes that protocols intended original function, and in doing so, detracts from its value, and further complicates its governance.
The Internet of Value
The QWERTY of Old and The Structure of New
All distributed ledger technologies — are protocols built on top of the Internet Protocol Suite (TCP/IP), also known as the ‘Internet Stack’.
Here is a simple image that illustrates the basics:
Blockchain Protocols are built within the application layers of the Internet Protocol Suite, and as such, are dependent upon the stability of the layers below it. The Transport Layer is dependent upon the Internet Layer, and the Internet Layer upon the Link Layer, and finally the Link Layer upon our hardware capabilities. Responsible governance of decentralized networks must acknowledge the often centralized, “off-chain” alterations of the protocol it is built on; including the Internet Protocol Suite (more on this later). If we wanted to switch over to a new link protocol for example, we would have to ensure that the existing hardware manufacturers all agree that such a link can be incorporated into new hardware devices, as well as ensure that the alterations to this layer will not impact the layers above in any negative manner.
If you don’t know the QWERTY problem…just stop it…of course you know it. Well, maybe not QWERTY specifically, but generally, the observation that once standardization occurs, a tradition is created, and through that tradition — the cementation of an inferior design or process within a complex system is possible; of which the ability to change towards something better is outweighed (via lack of coordination) by the perceived cost of that change which includes both familiarity and applicable knowledge.
The Transmission Control Protocol (TCP) is a protocol built within the Transport Systems Layer of the Internet Protocol Suite. This protocol was built in tandem with the first Internet Protocol (IP) as its foundation (usually coupled as TCP/IP) and has served as the dominant (widely used) protocol within that layer. TCP has significant applications built on-top of it including the World Wide Web. In 2000, a new Transport Systems protocol was developed: Streams Control Transmission Protocol (SCTP); however, a major obstacle to its adoption is that the successful implementation of the protocol requires fundamental changes to the stack. While efforts are being made for SCTP to be implemented (over UDP), SCTP is not likely to knock TCP from its throne as the dominant protocol within the layer anytime soon.
For all intents and purposes, let us suppose that the SCTP protocol is significantly better in all relevant categories that matter. Our inability to move towards this protocol and away from TCP is not due to a weakness of the protocol itself, but a coordination problem among its potential users.
The threat of this relationship as it applies to the Internet Stack has the same implications toward the development of the new Internet of Value. The structural outcome of a dominant single network platform will create the foundation for standardization to occur, and a significant obstacle to the adaptability of governance systems.
While standardization has its place, standardizing the use of protocols is dangerous for the potential(s) that blockchains offer; hosting global economic activities on a standardized protocol could lock us into a system that would require significant collateral (socio-economic impacts) to transition towards something better. While this may be an acceptable structure for the current internet system, this standardization could be a significant road block to the responsible adoption of this technology.
Above is a silly infographic (applauding all graphic designers) I made that describes some possible and some unlikely configurations that may be incorporated within the Internet of Value Protocol Suite. This includes layers for scalability, interoperability, security, governance and distributed applications. I’ve seen illustrations that display stacks like these and I’ve seen them represented by domains. These illustrations, from a conceptual standpoint are ill-suited for governance explanations, but provide an outline by which we can explore the relationships between them.
These stacks are protocols built on protocols, and are simply sets of rules that are expanded upon the further you move up or down the stack; typically in a manner where the tendency for change is unidirectional. Every modification implemented on the technology stack will impact all other layers (and therefore, governance systems) built on top of it.
Of these layers, I believe interoperability to be the most useful and impactful layers to think about during the continued development of the Internet of Value. Interoperability is the foundation to the principle of mobility.
The point of this is not to tell you what’s going to happen (as if I knew), but to emphasize the importance of diversity when it comes to decentralization. Yes, there are some protocols that were just meant for one another (TCP/IP), but encouraging the development of different protocol configurations is just as important as becoming decentralized within our own networks.
The implications of technological structure, real-world governance (including regulatory environments), and the human principles we strive to incorporate in the design of the Internet of Value will naturally develop the macro environment of our governance systems. Discussions around these aspects need to be pursued with imagination and creativity.
Good governance is about mitigating change; not preventing it.
Upcoming:
Episode 2: Administrative Governance and Decentralized Communities
