With blockchain, we can encode rules for stakeholder governance, store them on-chain, and enforce outcomes based on recognized stakeholder interaction with the blockchain. The value proposition of using blockchain is derived from its combination of censorship resistance and integrity assurance.
- Censorship Resistance
- Self-Defense Against Big Bad Tech
- Integrity Assurance
- Administrative Cost Savings
“In particular, cryptocurrency enables individuals and organizations to make censored transactions. Procuring drugs on the internet. That’s an example of a censored transaction. Buying US dollars in Argentina is another example. Paying a sex worker. Sending money to a friend in Iran. Making an online purchase as an unbanked individual. Selling cannabis as a dispensary. Getting money out of Venezuela. Supporting dissidents in Hong Kong. The primary utility of cryptocurrency lies in engaging in financial activity that is otherwise suppressed or prohibited.”
“The laws of one jurisdiction are often deemed unethical and unacceptable by its citizens and those of other geographies. To say that cryptocurrency is used primarily to engage in illegal or socially unacceptable activities is not a normative statement…It is used by civilians to break unjust laws and escape humanitarian crisis, and it is used by the policymakers who write those very same laws.”
“We know Twitter and Facebook manipulate feeds, with algorithms that exploit our minds in order to optimize engagement, at our cost. We know that Google ad network, with its user profiling, allows third parties to target political ads to people most subjectable to them.”
It is worth pursuing censorship resistant platforms for coordination. The question remains: How do we govern such systems so that power isn’t abused? How do we collectively decide on the rules and how to change the rules?
“We need to be clear on what exactly we mean by ‘censorship resistance’. I would put forward that the chief benefit of Bitcoin, for example, is that transfers are accepted if and only if they are valid. One consequence of this is that, valid transfers are always accepted. This is censorship resistance. But the two are not equivalent. It also follows that, invalid transfers are never accepted. We might call this ‘integrity assurance’.”
Bitcoin’s state machine does not apply transactions to the previous state unless they meet the specific requirements of the Bitcoin protocol. Modern blockchains allow us to extend transaction verification and express arbitrarily complex state machines.
As an example, consider the Polkadot
crowdfund module. Parachains use this module to raise funds for rent payments to the relay chain. The module also efficiently handles cleanup for when the parachain fund raise is unsuccessful and contributors want their funds returned (via child-tries).
How much money do existing crowdfunding platforms make? Would replacing them with an on-chain mechanism like
crowdfund lower the costs for users? I think so.
The generalized version of this question concerns whether using blockchain to decide on rules and enforce those rules is more efficient than existing infrastructure. It’s far less efficient in terms of the cost to process basic transactions, but I wonder if using it to coordinate more complex organizational relationships will realize administrative cost savings.