The emancipatory potential of the blockchain will rest on its property arrangments

A new legal and technological entity called a Distributed Collaborative Organization represents a new way of organizing multi-stakeholder cooperatives at scale. Could the difference between dystopia and protopia pivot on the structure of ownership?

Excerpted from Noah Thorp, on Disintermediating Banking and User Accounts:

“The revolution in progress can generally be described as “disintermediation”. It is the transference of trust, data, and ownership infrastructure from banks and businesses into distributed peer to peer network protocols.

A distributed “world wide ledger” is one of several technologies transforming our highly centralized structures. This technology, cryptically named the “block chain” is embodied in several distributed networks such as Bitcoin, Eris Industries DB, and Ethereum.

Through an encrypted world wide ledger built on a block chain, trust in the systems maintained by third party human institutions can be replaced by trust in math. In block chain systems, account identity and transactions are cryptographically verified by network “consensus” rather than by trust in a single third party.

Currencies are not the only assets that can be traded on block chain protocols. Distributed user accounts are the most basic element of the cryptographic network infrastructure. The next wave of innovation is in the transference of asset ownership of all types.

For example, ColoredCoins can be used to distribute asset ownership information via meta-data associated with low cost bitcoin transactions. In practice, ColoredCoins are used to represent and trade fractional ownership of art on Artlery.com and profit sharing rights of co-authored code at Assembly.com. Although ColoredCoins leverage the bitcoin protocol, other block chains authored by Stellar, Eris Industries, and Ethereum are quickly gaining momentum to offer similar functionality.

Whereas block chain protocols decentralize transactions, encrypted peer to peer file sharing networks promise to remove the need for centralized databases. In this area technologies like Inter Planetary File System (IPFS) and Maidsafe represent the edge of the innovating wave.

The world looks different when you combine distributed ledgers, file systems, cryptographic trust, and financial transactions. In this world interpersonal human trust is still essential?—?but opportunities for corruption are reduced.

As our infrastructure shifts, our broad stroke categorization of libertarian, socialist, and capitalist systems is under heavy strain. Republican pot growers will leverage crypto currency to provide protections that banks are afraid to provide. Intentional communities and cooperatives will embrace cryptographically enabled equity structures to power “off the grid” solar energy markets using financial instruments previously wielded exclusively by venture capitalists.

The protocol shift towards decentralization is revitalizing the libertarian, collaborative, and self-organizing memes that circulated at the dawn of the internet revolution. As the sharing economy enables peer to peer transactions of underutilized assets at scale, cooperatives are cool again. Holacracy and co-working memes have become water cooler conversations instead of fringe encampments. This contemporary ecology grows on the rich meme humus of Norbert Wiener (Cybernetics), John Perry Barlow (EFF), Dee Hock (Visa’s chaordic founder), Kevin Kelly, Stuart Brand, Howard Rheingold, The Whole Earth Catalogue, The Well, Wired Magazine, Burning Man’s 10 Principles, and the Long Now Foundation.

There are a couple important words for understanding these new structures. Let’s review them.

“Autonomous” means running on its own without intervention. A web hosted weather prediction service could run with minimal intervention. Self-driving cars are also autonomous.

“Smart contracts” are like spreadsheet scripts for a distributed ledger. Where a block chain defines the distributed immutable ledger of transactions, smart contract scripts define programmatic actions that will be triggered by block chain transactions. Smart contracts can legally signify buying and selling of equity, voting, and entering into contracts.

The earliest breakthroughs in merging block chains and smart contracts is promised by the Ethereum Foundation. Ethereum raised over $15 million in the second largest crowd equity fund to date. Their solution provides the first full featured programming environment that runs distributed applications on a block chain.

Imagine that you created a lightweight corporation that automates all of its contract signing, profit distribution, and financial transactions. This entity stores its data and executes its code on a distributed peer to peer network. It is “autonomous” because it can run on its own after setup. It manages its bank account and transactions via a distributed network such as Bitcoin. Its accounts are owned by a corporate legal entity registered with the state, but it has no employees. Surprise, you just invented a Distributed Autonomous Corporation (DAC).

The first Distributed Autonomous Corporations (DACs) are likely to be escrow and gambling services. As we bring more of science fiction into being, DACs may control financial decision making for self-driving car rentals, drone services, personal internet of things networks, and unmanned corporations. Consider: Foxconn, the world’s largest Chinese manufacturer, is manufacturing 30k robots per year; the CEO of Baidu has proposed a state level Chinese initiative to develop AI in an effort similar to the Apollo Space program. The smarter smart contract code becomes the more autonomous organizational decision making will occur.

The biggest concern is one of control. Distributed or not, autonomous entities will make many decisions representing trade offs of value. It’s not a question of if machines will make decisions for us, it’s a question of what decisions and under what conditions. For instance, if a self-driving car has a choice of crashing into a school bus or driving the passengers off a cliff which should it choose? Programmers are coding ethical decisions like this at this very moment.

As David Nordfors, chair of the Innovation For Jobs Summit says “If we care more about tasks than about people, then tech will replace people. If we care more about people than about tasks, then tech will leverage people.” There are many ways in which technological innovation can disrupt unemployment and machines can work for society rather than society for machines?—?but we have to want that.

A new legal and technological entity called a Distributed Collaborative Organization represents a new way of organizing multi-stakeholder cooperatives at scale. Could the difference between dystopia and protopia pivot on the structure of ownership?

Imagine regularly entering into ad hoc equity relationships with hundreds of collaborators. Distributed Collaborative Organizations (DCOs) are an example of collective peer to peer ownership suitable for ecosystems of stakeholders. Legal innovations for DCOs, pioneered by companies like Swarm.Fund, use carefully crafted legal structures to enable crowd funded investment in portfolios of private companies by non-accredited investors. The sociological outcome is the empowerment of multi stakeholder cooperatives at scale.

Meanwhile, dynamic governance structures are evolving to compliment the unboxing of collaboration into dynamic equity arrangements. These newly ascendant species of dynamically governed entities include Holacracy, Sociocracy, Podulism, and the working practices of SEMCO, Gore, Valve, and Morning Star.

Dynamic governance systems still have not fully related to the emerging crypto economic layer. However, distributed peer to peer networks, adaptive organizations, and currency protocols are co-evolving.”

2 Comments The emancipatory potential of the blockchain will rest on its property arrangments

  1. AvatarRupert Daniel

    This sounds like a solution focused development that might unlock investment and speed up economic and equality.

    I wonder how the capability necessary to participate in this new form of social and economic governance will be shared ? I guess the biggest concern would be whether we will just be replacing a system in which we trade a Plutocracy for a technocracy ?

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