Blockchain 3.0: Justice Applications Beyond Currency, Economics, and Markets - Blockchain: Blueprint for a New Economy (2015)

Blockchain: Blueprint for a New Economy (2015)

Chapter 3. Blockchain 3.0: Justice Applications Beyond Currency, Economics, and Markets

Blockchain Technology Is a New and Highly Effective Model for Organizing Activity

Not only is there the possibility that blockchain technology could reinvent every category of monetary markets, payments, financial services, and economics, but it might also offer similar reconfiguration possibilities to all industries, and even more broadly, to nearly all areas of human endeavor. The blockchain is fundamentally a new paradigm for organizing activity with less friction and more efficiency, and at much greater scale than current paradigms. It is not just that blockchain technology is decentralized and that decentralization as a general model can work well now because there is a liquid enough underlying network with the Web interconnecting all humans, including for disintermediated transactions: blockchain technology affords a universal and global scope and scale that was previously impossible. This can be true for resource allocation, in particular to allow for increasingly automated resource allocation of physical-world assets and also human assets. Blockchain technology facilitates the coordination and acknowledgment of all manner of human interaction, facilitating a higher order of collaboration and possibly paving the way for human/machine interaction. Perhaps all modes of human activity could be coordinated with blockchain technology to some degree, or at a minimum reinvented with blockchain concepts. Further, blockchain technology is not just a better organizational model functionally, practically, and quantitatively; by requiring consensus to operate, the model could also have greater liberty, equality, and empowerment qualitatively. Thus, the blockchain is a complete solution that integrates both extrinsic and intrinsic and qualitative and quantitative benefits.

Extensibility of Blockchain Technology Concepts

Blockchain technology can potentially unleash an important element of creativity and invention in anyone who encounters the concepts in a broad and general way. This is in the sense that it is necessary to understand the new ideas separately and together. These include concepts such as public-key and private-key cryptography, peer-to-peer file sharing, distributed computing, network models, pseudonymity, blockchain ledgers, cryptocurrency protocols, and cryptocurrency. This calls into question what might have seemed to be established definitions of traditional parameters of the modern world like currency, economics, trust, value, and exchange. It is a requirement and twenty-first-century skill set to understand these concepts in order to operate in the blockchain technology environment. When you understand the concepts involved, not only is it possible to innovate blockchain-related solutions, but further, the concepts are portable to other contexts. This extensibility of blockchain-related concepts may be the source of the greatest impact of blockchain technology as human agents understand these concepts and deploy them in every venue they can imagine. The Internet was a similar example of universality in application and extensibility of the core technology concept; it meant that everything could be done in a new way—quicker, with greater reach, in real time, on demand, via worldwide broadcast, at lower cost. Blockchain technology is rich with new concepts that could become part of the standard intellectual vernacular and toolkit.

Fundamental Economic Principles: Discovery, Value Attribution, and Exchange

One broad way of thinking about the use of blockchain concepts is applying them beyond the original context to see ways in which everything is like an economy, a market, and a currency—and equally important, how everything is not like an economy. This is a mindset that requires recognizing the fundamental properties of economics and markets in real-life situations. Blockchain technology helps elucidate that everything we see and experience, every system in life, is economics to some degree: a system for allocating resources. Furthermore, systems and interactions are economics in that they are a matter of awareness and discovery, value attribution, and potential interaction and exchange, and may include a mechanism for this exchange like a currency or token, or even a simple exchange of force, energy, or concentration (as in biological systems). This same basic economic structure could be said to exist universally, whether in a collaborative work team or at a farmers’ market. The quantized structure of blockchain technology in the form of ledger transaction-level tracking could mean higher-resolution activity tracking, several orders of magnitude more detailed and extensive than we are accustomed to at present, a time at which we are still grateful for SKU-level tracking on a bill of materials.

Blockchain tracking could mean that all contributions to a system by all involved parties, no matter how minute, can be assessed and attributed in a seamless, automated way, for later roll-up to the macro level—or not, because some community value systems might dictate not having user contributions explicitly tracked. The ethos and morality of tracking is a separate and interesting social-science topic to explore in the blockchain studies research agenda more generally. However, one way that the blockchain-based capacity for tracking could work is in the form of a “GitHub + Bitcoin” concept, for example, that tracks code contributions line by line over all revisions of a software code corpus over time. This is important, because economically savvy rational agents participating in the system (i.e., currently humans) want to assess the contributions they and others have made, and have these contributions tracked and acknowledged for remuneration, reputation, status garnering, and other rewards.

Blockchain Technology Could Be Used in the Administration of All Quanta

What the blockchain could facilitate in an automated computational way is one universal, seamless model for the coordinated activity of near-infinite numbers of transactions, a universal transaction system on an order never before imagined for human activity. In some sense, blockchain technology could be a supercomputer for reality. Any and all phenomena that can be quantized (defined in discrete units or packages) can be denoted this way and encoded and transacted in an automated fashion on the blockchain. Blockchain venture capitalist David Johnston’s summary and prognostication of this dynamic is that anything that can be decentralized will be, showing his belief in the inherent efficiency and benefit or superiority of the blockchain model. Decentralization is “where water goes,” where water flows naturally, along the way of least resistance and least effort. The blockchain could be an Occam’s razor, the most efficient, direct, and natural means of coordinating all human and machine activity; it is a natural efficiency process.

Blockchain Layer Could Facilitate Big Data’s Predictive Task Automation

As big data allows the predictive modeling of more and more processes of reality, blockchain technology could help turn prediction into action. Blockchain technology could be joined with big data, layered onto the reactive-to-predictive transformation that is slowly under way in big-data science to allow the automated operation of large areas of tasks through smart contracts and economics. Big data’s predictive analysis could dovetail perfectly with the automatic execution of smart contracts. We could accomplish this specifically by adding blockchain technology as the embedded economic payments layer and the tool for the administration of quanta, implemented through automated smart contracts, Dapps, DAOs, and DACs. The automated operation of huge classes of tasks could relieve humans because the tasks would instead be handled by a universal, decentralized, globally distributed computing system. We thought big data was big, but the potential quantization and tracking and administration of all classes of activity and reality via blockchain technology at both lower and higher resolutions hints at the next orders-of-magnitude progression up from the current big-data era that is itself still developing.

Distributed Censorship-Resistant Organizational Models

The primary argument for Blockchain 1.0 and 2.0 transactions is the economic efficiency and cost savings afforded by trustless interaction in decentralized network models, but freedom and empowerment are also important dimensions of the blockchain. Decentralized models can be especially effective at promoting freedom and economic transfer in countries with restrictive political regimes and capital controls. Freedom is available in the sense of pseudonymous transactions outside of the visibility, tracking, and regulatory purview of local governments. This can be a significant issue for citizens in emerging markets where local capital controls, government regulations, and overly restrictive economic environments make it much harder to engage in a variety of standard activities, including starting new businesses. State economic controls, together with a lack of trust in fiat currency, have been driving a lot of interest in cryptocurrencies.

The freedom attribute associated with blockchain technologies becomes more pronounced in Blockchain 3.0, the next category of application beyond currency and market transactions. Through its global decentralized nature, blockchain technology has the potential ability to circumvent the current limitations of geographic jurisdictions. There is an argument that blockchain technology can more equitably address issues related to freedom, jurisdiction, censorship, and regulation, perhaps in ways that nation-state models and international diplomacy efforts regarding human rights cannot. Irrespective of supporting the legitimacy of nation-states, there is a scale and jurisdiction acknowledgment and argument that certain operations are transnational and are more effectively administered, coordinated, monitored, and reviewed at a higher organizational level such as that of a World Trade Organization.

The idea is to uplift transnational organizations from the limitations of geography-based, nation-state jurisdiction to a truly global cloud. The first point is that transnational organizations need transnational governance structures. The reach, accessibility, and transparency of blockchain technology could be an effective transnational governance structure. Blockchain governance is more congruent with the character and needs of transnational organizations than nation-state governance. The second point is that not only is the transnational governance provided by the blockchain more effective, it is fairer. There is potentially more equality, justice, and freedom available to organizations and their participants in a decentralized, cloud-based model. This is provided by the blockchain’s immutable public record, transparency, access, and reach. Anyone worldwide could look up and confirm the activities of transnational organizations on the blockchain. Thus, the blockchain is a global system of checks and balances that creates trust among all parties. This is precisely the sort of core infrastructural element that could allow humanity to scale to orders-of-magnitude larger progress with truly global organizations and coordination mechanisms.

One activity for which this could make sense is the administration of the Internet. Internet administration organizations have a transnational purview but are based in nation-state localities. An example is ICANN, the Internet Corporation for Assigned Names and Numbers. ICANN manages Internet protocol numbers and namespaces, coordinating the translation of www.example.com to the numeric IP address 93.184.216.119 for connection across the Internet.

Blockchain technology simultaneously highlights the issue of the appropriate administration of transnational public goods and presents a solution. Wikipedia is a similar transnational public good that is currently subject to a local jurisdiction that could impose on the organization an artificial or biased agenda. It is possible that blockchain mechanisms might be the most efficient and equitable models for administering all transnational public goods, particularly due to their participative, democratic, and distributed nature.

A notable case in which jurisdictional nation-state entities were able to effect centralized and biased control is WikiLeaks. In the Edward Snowden whistle-blowing case in 2010, individuals were trying to make financial contributions in support of the WikiLeaks organization but, strongarmed by centralized government agendas, credit card payment networks and PayPal, refused to accept such contributions, and WikiLeaks was effectively embargoed.75 Bitcoin contributions, had they been possible at the time, would have been direct, and possibly produced a different outcome. The Electronic Freedom Foundation (EFF), a nonprofit organization that supports personal freedoms, and other related organizations are similarly located in jurisdictional locations at present, which could always mean the operation of curtailed agendas if authorities were to exercise influence over the organization and individuals involved.

Namecoin: Decentralized Domain Name System

One of the first noncurrency uses of blockchain technology was to prevent Internet censorship with Namecoin, an altcoin that can be used to verify Domain Name System (DNS) registrations. Namecoin is an alternative DNS that is transnational and cannot be controlled by any government or corporation. The benefit of a decentralized DNS is that it makes it possible for anyone worldwide who might be otherwise suppressed or censored to publish information freely in the Internet.

Just as Bitcoin is a decentralized currency that cannot be shut down, Namecoin is the basis for a decentralized DNS (i.e., web URLs).76 The idea is that URLs permanently embedded in the blockchain would be resistant to the government seizing of domains. The censorship issue is that in a URL such as google.com, centralized authorities control the top-level domain, the .com portion (the United States controls .com URLs), and therefore can potentially seize and redirect the URL. Centralized authorities control all top-level domains; for example, China controls all .cn domains. Therefore, a decentralized DNS means that top-level domains can exist that are not controlled by anyone, and they have DNS lookup tables shared on a peer-to-peer network. As long as there are volunteers running the decentralized DNS server software, alternative domains registered in this system can be accessed. Authorities cannot impose rules to affect the operation of a well-designed and executed global peer-to-peer top-level domain. The same Bitcoin structure is used in the implementation of a separate blockchain and coin, Namecoin, for decentralized DNS.

Namecoin is not at present intended for the registration of all domains, but as a free speech mechanism for domains that might be sensitive to censorship (for example, in countries with limited political freedom). The top-level domain for Namecoin is .bit. Interested parties register .bitdomains with Namecoin. The actions necessary to register a new domain or to update an existing one are built in to the Namecoin protocol, based on transaction type—for example, the “name_new” transaction at a cost of 0.01 NMC (Namecoin is convertible in/out of Bitcoin). Domains can be registered directly with the Namecoin system or via a registration service like https://dotbit.me/.

Because the top-level domain .bit is outside the traditional operation of the Internet, to facilitate viewing .bit websites, there are .bit proxy servers to handle DNS requests in a browser, as well as Firefox and Chrome extensions. According to the Bitcoin Contact website as of October 2014, there are 178,397 .bit domains registered, including, for example, wikileaks.bit. The key point is that .bit domains are a free-speech mechanism, because now having the ability to view .bit websites means attempts to silence those with a legitimate message will have less of a chance of succeeding. Just as there are benefits to having decentralized currency transactions, there are benefits to having many other kinds of decentralized transactions.

Challenges and Other Decentralized DNS Services

Technical issues were found with the Namecoin implementation that left .bit domains vulnerable to takeover (a bug that made it possible to update values if the transaction input name matched the transaction output name, as well as new registrations to be overridden).77 Developers have been remedying these issues. Other critics (as with Bitcoin in general) point out how the key features of decentralized DNS services (cheap and anonymous domain name creation, and a system that places domain names out of the reach of central authorities) enable bad players and illegality.78However, an industry white paper counters these claims with examples of using the public traceability feature of the blockchain ledger to apprehend criminals, and points out that there are many legitimate uses of this technology.79

Meanwhile, other decentralized name services are in development, such as a similar .P2P decentralized top-level domain from BitShares. The project points out how the decentralized DNS model eliminates the certificate authority as the third-party intermediary (which can leave URLs vulnerable to attack), and that a blockchain model can also be more secure because you lose control of your domain only if you share the private key.80 DotP2P has other features to improve DNS registry, such as auction-like price discovery to counter domain-name squatting. Related to decentralized DNS services is digital identity confirmation services; in October 2014, BitShares launched the KeyID service toward this end. KeyID, rebranded from Keyhotee, provides an identification and email system on a decentralized blockchain for secure messaging and for secure authentication.81

Freedom of Speech/Anti-Censorship Applications: Alexandria and Ostel

Alexandria is one example of a blockchain-based freedom-of-speech-promoting project. It aims to create an unalterable historical record by encoding Twitter feeds to a blockchain. Any tweets mentioning certain prespecified keywords (like Ukraine or ebola) are encoded into the Alexandria blockchain using Florincoin, a cryptocurrency based on Bitcoin and Litecoin with quick transaction processing (40 seconds) and a longer memo annotation field (conceptually: Memocoin). This method captures tweets that might be censored out later by takedown requests.82 Florincoin’s key enabling feature for this is transaction comments, a 528-character field for the recording of both metadata and tweet content.83 The expanded commenting functionality could be used more broadly for many kinds of blockchain applications, such as providing metadata and secure pointers to genomic sequences or X-ray files. Another freedom-oriented application is Ostel’s free encrypted Voice over IP (VoIP) telephony service, because the United States National Security Agency (NSA) can listen in on other services like Skype.84 Ostel is a nice example of David Brin’s bottom-up souveillance counterweight85 to top-down NSA surveillance (of both traditional telephone calls and Skype86).

Decentralized DNS Functionality Beyond Free Speech: Digital Identity

Beyond its genesis motivation to enable free speech and provide a countermeasure to the centralized control of the Internet, there are other important uses of decentralized DNS functionality in the developing Blockchain 3.0 ecosystem. The blockchain is allowing a rethinking and decentralization of all Internet network operations—for example, DNS services (Namecoin, DotP2P), digital identity (KeyID, and OneName and BitID, which are discussed shortly), and network traffic communications (OpenLibernet.org, an open mesh network communications protocol).

One challenge related to Bitcoin, the Internet, and network communications more generally is Zooko’s Triangle. This is the problem encountered in any system that gives names to participants in a network protocol: how to make identifiers such as a URL or a person’s handle (e.g., DeMirage99) simultaneously secure, decentralized, and human-usable (i.e., not in the form of a 32-character alphanumeric string).87 Innovations and maturity in blockchain technology require having solutions to the Zooko’s Triangle challenge. Namecoin functionality might offer such a solution. Namecoin is used to store URLs, but it can store any information. The core functionality of Namecoin is that it is a name/value store system. Therefore, just as Bitcoin has uses beyond currency, Namecoin has uses beyond DNS for storing information more generally. Using the nondomain namespaces of Namecoin, we can store information that would otherwise be hard to securely or conveniently exchange. A prime application for this is a resolution to Zooko’s Triangle, allowing continuously available Internet-based digital identity confirmation of a public key (a 32-character alphanumeric string) with a human-usable handle (DeMirage99) as digital identity services like OneName and BitID allow.

Digital Identity Verification

OneName and BitID are examples of blockchain-based digital identity services. They confirm an individual’s identity to a website. Decentralized digital verification services take advantage of the fact that all Bitcoin users have a personal wallet, and therefore a wallet address. This could speed access to all aspects of websites, simultaneously improving user experience, anonymity, and security. It can also facilitate ecommerce because customers using Bitcoin-address login are already enabled for purchase.

On the surface, OneName is an elegant Bitcoin-facilitating utility, but in the background, it is a more sophisticated decentralized digital identity verification system that could be extensible beyond its initial use case. OneName helps solve the problem that 27- through 34-character Bitcoin addresses are (at the expense of being cryptographically sound) cumbersome for human users. Some other Bitcoin wallet services and exchanges, like Coinbase, have allowed Bitcoin to be sent to email addresses for some time. The OneName service is a more secure solution. With OneName, users can set up a more practical name (like a social media handle) to use for Bitcoin transactions. After a user is registered with OneName, asking for payment is as easy as adding a plus sign to your username (for example, +DeMirage99). OneName is an open source protocol built on the Namecoin protocol that puts users in charge of their digital identity verification, rather than allowing centralized social media sites like Facebook, LinkedIn, and Twitter to be the de facto identity verification platform, given that many websites have opted to authenticate users with social media APIs.88

A similar project is BitID, which allows users to log in to websites with their Bitcoin address. Instead of “Login with Facebook,” you can “Connect with Bitcoin” (your Bitcoin address). BitID is a decentralized authentication protocol that takes advantage of Bitcoin wallets as a form of identification and QR codes for service or platform access points. It enables users to access an online account by verifying themselves with their wallet address and uses a mobile device as the private-key authenticator.89

Another proposed digital identity verification business is Bithandle, which was developed as a hackathon project. Bithandle offers short-handle registration, verification, and ecommerce service. As with Onename and BitID, users can register an easy-to-use handle—for instance, “Coinmaster”—that is linked to a wallet address via a public or private real-life identity check and a Bitcoin blockchain transaction. The service offers ongoing real-time digital identity verification and one-click auto-enabled ecommerce per “Login with Bitcoin” website access. An obvious problem with the mainstream adoption of Bitcoin is the unwieldy 32-character Bitcoin address, or QR code, needed to send and receive funds. Instead, Bithandle gives users the ability to link a short handle to a Bitcoin address, which is confirmed initially with real-life identity and looked up in the blockchain on demand at any future moment. Real-time digital identity verification services could be quite crucial; already the worldwide market size for identity authentication and verification is $11 billion annually.90

Specifically, how Bithandle works is that in the digital identity registration process, participants register a Bitcoin username, an easy-to-use handle that can then be used to “Login with Bitcoin” to websites. As mentioned, this is similar to the ability to access websites by “Login with Facebook” or “Login with Twitter” but automatically connects to a user’s Bitcoin address for proof of identity. When a user sets up a Bithandle, his real-life identity is confirmed with Facebook, Twitter, LinkedIn, or other services, and this can be posted publically (like OneName) or not (as OneName does not allow), with the user’s Bithandle.

Later, for real-time digital identity verification, “Logging in with Bitcoin” means that a Bithandle is already connected to a Bitcoin address, which securely facilitates ecommerce without the user having to register an account and provide personal identity and financial details. Bithandle thus helps streamline user interactions with websites in several ways. First, websites do not have to maintain user account registries (“honeypot” risks for hacking). Second, every user “Logging in with Bitcoin” is automatically enabled for one-click ecommerce purchases. Third, the Bithandle service can provide real-time blockchain lookups to confirm user digital identity at any future time on demand—for example, to reauthorize a user for subsequent purchases.

Blockchain Neutrality

Cryptography experts and blockchain developers and architects point out the importance of designing the blockchain industry with some of the same principles that have become baked in to the Internet structure over time, like neutrality. In the case of the Internet, net neutrality is the principle that Internet service providers should enable access to all content and applications regardless of the source and without favoring or blocking particular products or websites. The concept is similar for cryptocurrencies: Bitcoin neutrality means the ability for all persons everywhere to be able to easily adopt Bitcoin. This means that anyone can start using Bitcoin, in any and every culture, language, religion, and geography, political system, and economic regime.91 Bitcoin is just a currency; it can be used within any kind of existing political, economic, or religious system. For example, the Islamic Bank of Bitcoin is investigating ways to conduct Sharia-compliant banking with Bitcoin.92 A key point of Bitcoin neutrality is that the real target market for whom Bitcoin could be most useful is the “unbanked,” individuals who do not have access to traditional banking services for any number of reasons, estimated at 53 percent of the worldwide population.93 Even in the United States, 7.7 percent of households are forecast to be unbanked or underbanked.94

Bitcoin neutrality means access for the unbanked and underbanked, which requires Bitcoin solutions that apply in all low-tech environments, with features like SMS payment, paper wallets, and batched blockchain transactions. Having neutrality-oriented, easy-to-use solutions (the “Twitter of emerging market Bitcoin”) for Bitcoin could trigger extremely fast uptake in underbanked markets, continuing the trend of 31 percent of Kenya’s GDP being spent through mobile phones.95 There are different SMS Bitcoin wallets and delivery mechanisms (like 37Coins96 and Coinapult, and projects like Kipochi97 that are integrated with commonly used emerging-markets mobile finance platforms like M-Pesa. A similar project is a mobile cryptowallet app, Saldo.mx, which uses the Ripple open source protocol for clearing, and links people living in the United States and Latin America for the remote payment of bills, insurance, airtime, credit, and products.

Digital Divide of Bitcoin

The term digital divide has typically referred to the gap between those who have access to certain technologies and those who do not. In the case of cryptocurrencies, if they are applied with the principles of neutrality, everyone worldwide might start to have access. Thus, alternative currencies could be a helpful tool for bridging the digital divide. However, there is another tier of digital divide beyond access: know-how. A new digital divide could arise (and arguably already has in some sense) between those who know how to operate securely on the Internet and those who do not. The principles of neutrality should be extended such that appropriate mainstream tools make it possible for anyone to operate anonymously (or rather pseudonymously), privately, and securely in all of their web-based interactions and transactions.

Digital Art: Blockchain Attestation Services (Notary, Intellectual Property Protection)

Digital art is another arena in which blockchain cryptography can provide a paradigm-shifting improvement (it’s also a good opportunity to discuss hashing and timestamping, important concepts for the rest of the book). The term digital art refers to intellectual property (IP) very generally, not just online artworks. Art is connoted in the patenting sense, meaning “owned IP.” As we’ve discussed, in the context of digital asset proof and protection, identity can be seen as just one application, although one that might require more extensive specialty features. Whereas digital identity relies on users having a Bitcoin wallet address, digital asset proof in the context of attestation services relies on the blockchain functionality of hashing and timestamping. Attestation services (declaring something to be true, such as asset ownership) are referred to as digital art. The main use of the term digital art in the blockchain industry is to refer to using the blockchain to register any form of IP (entirely digital or representing something in the physical world) or conduct attestation services more generally, such as contract notarization. The term is also used in the blockchain industry to mean online graphics, images photographs, or digitally created artworks that are digital assets, and thus IP to protect.

Hashing Plus Timestamping

For attestation services, blockchain technology brings together two key functions: hashing and secure timestamping. Hashing is running a computing algorithm over any content file (a document, a genome file, a GIF file, a video, etc.), the result of which is a compressed string of alphanumeric characters that cannot be back-computed into the original content. For example, every human genome file could be turned into a 64-character hash string as a unique and private identifier for that content.98 The hash represents the exact content of original file. Anytime the content needs to be reconfirmed, the same hash algorithm is run over the file, and the hash signature will be the same if the file has not changed. The hash is short enough to be included as text in a blockchain transaction, which thus provides the secure timestamping function of when a specific attestation transaction occurred. Via the hash, the original file content has essentially been encoded into the blockchain. The blockchain can serve as a document registry.

The key idea is using cryptographic hashes as a form of asset verification and attestation, the importance of which could be extremely significant. Blockchain hash functionality could be a key function for the operation of the whole of society, using the blockchain to prove the existence and exact contents of any document or other digital asset at a certain time. Further, the blockchain attestation functionality of hashing-plus-timestamping supports the idea of the blockchain as a new class of information technology.

Blockchain attestation services more generally comprise all manner of services related to document filing, storage, and registry; notary services (validation); and IP protection. As articulated, these functions take advantage of the blockchain’s ability to use cryptographic hashes as a permanent and public way to record and store information, and also to find it later with a block explorer and the blockchain address pointer from the blockchain as a universal central repository. The core functionality is the ability to verify a digital asset via a public general ledger.

There are several blockchain-based attestation services in different stages of development or proof of concept, such as Proof of Existence, Virtual Notary, Bitnotar, Chronobit, and Pavilion.io. The specifics of how they might be different or similar are emerging, and there is presumably a lot of functionality fungibility in that any of the services can simply hash a generic file of any type. The first and longest-standing service, Proof of Existence, is described in detail next.

Proof of Existence

One of the first services to offer blockchain attestation is Proof of Existence. People can use the web-based service to hash things such as art or software to prove authorship of the works.99 Founder Manuel Aráoz had the idea of proving a document’s integrity by using a cryptographic hash, but the problem was not knowing when the document was created, until the blockchain could add a trusted timestamping mechanism.100 Proof of Existence demonstrates document ownership without revealing the information it contains, and it provides proof that a document was authored at a particular time. Figure 3-1 shows a screenshot from the scrolling list of newly registered digital assets with the Proof of Existence service.

“Last documents registered” digest from Proof of Existence

Figure 3-1. “Last documents registered” digest from Proof of Existence

With this tool, the blockchain can be used to prove the existence and exact contents of a document or other digital asset at a certain time (a revolutionary capability). Providing timestamped data in an unalterable state while maintaining confidentiality is perfect for a wide range of legal and civic applications. Attorneys, clients, and public administrators could use the Proof of Existence blockchain functionality to prove the existence of many documents including wills, deeds, powers of attorney, health care directives, promissory notes, the satisfaction of a promissory note, and so on without disclosing the contents of the document. With the blockchain timestamp feature, users can prove that a document (like a will) they will be presenting to a court in the future is the same unaltered document that was presented to the blockchain at a prior point in time. These kinds of attestation services can be used for any kind of documents and digital assets. Developers, for example, can use the service to create unique hashes for each version of code that they create and later verify versions of their code, inventors can prove they had an idea at a certain time, and authors can protect their works.

The proof-of-existence function works in this way: first, you present your document (or any file) to the service website; you’re then prompted to “click or drag and drop your document here." The site does not upload or copy the content of the document but instead (on the client side) converts the contents to a cryptographic digest or hash. Algorithms create a digest, or a cryptographic string that is representative of a piece of data; the digest created by a hash function is based on the characteristics of a document. No two digests are the same, unless the data used to compute the digests is the same. Thus, the hash represents the exact contents of the document presented. The cryptographic hash of the document is inserted into a transaction, and when the transaction is mined into a block, the block timestamp becomes the document’s timestamp, and via the hash the document’s content has essentially been encoded into the blockchain. When the same document is presented again, the same marker will be created and therefore provide verification that the documents are the same. If, however, the document has changed in any way, the new marker will not match the previous marker. This is how the system verifies the document.101

One benefit of attestation services is how efficiently they make use of the blockchain. Original documents are not stored on the blockchain, just their hash is stored, which is accessible by private key. Whenever a proof of existence needs to be confirmed, if the recomputed hash is the same as the original hash registered in the blockchain, the document can be verified as unchanged. The hash does not need to (and cannot) translate back into the document (hashes are only one-way; their security feature makes back-computation impossible). The retrieval phase of proof-of-existence functionality can be thought of as a “content verification service.” Regarding longevity, the crucial part is having the private key to the digital asset (the hash) that is registered on the blockchain. This does mean trusting that whichever blockchain used will be available in the future; thus, it would be good to select an attestation service that uses a standard blockchain like the Bitcoin blockchain.

Limitations

Admittedly there are some limitations to hashing-plus-timestamping blockchain attestation services. First, a blockchain is not required for timestamping, because other third-party services provide this for free, whereas a small transaction fee (to compensate miners) is required to post a digital asset attestation to the blockchain. Also, blockchain transaction confirmations are not immediate; the time the document was added to the blockchain is recorded, not when the document was submitted; and the precise time of digital asset creation can be important in IP registration services. Most problematically, timestamping does not prove ownership. However, blockchain attestation services as currently envisioned are an important first step and could be incorporated in 3.0 versions that include other elements in the blockchain ecosystem. Some ideas propose including digital identity to prove ownership and a non-blockchain-based timestamping element for “time document created.” A potential technical limitation is the contention that the hash might be less secure when you’re hashing very large documents (an 8-GB genome file, for example) compared to small documents (a standard IOU contract), but this concern is unwarranted. The scalability to any file size is the beauty of the hash structure, and it is the hash length (typically 64 characters at present) that is the focus for security, and it could be made longer in the future. The usual threats to hash technology—inverse hashes (an inverse function to attempt to back-compute the hashed content) and collisions (two different files produce the same hash)—are limited in the way hashes are currently used in blockchain.

Virtual Notary, Bitnotar, and Chronobit

Virtual Notary is another project that similarly conceptualizes the need and fulfillment of these kinds of blockchain attestation services. Like Proof of Existence, Virtual Notary does not store files but instead provides a certificate that attests to the file’s contents at the moment of submission. The service provides a certificate virtual notary-type service for many different “file types” such as documents, web pages, Twitter feeds, stock prices, exchange rates, weather conditions, DNS entries, email address verifications, university affiliations, real estate values, statements and contracts, and random-number drawing. Files can be in any format, including Microsoft Word, PDF, JPG, PNG, TXT, and PPT (Microsoft PowerPoint). The site generates a certificate that can be downloaded from the site, and also offers the other side of the service—examining existing certificates. Virtual Notary’s aim is to provide a digital, neutral, dispassionate witness for recording online facts and conveying them to third parties in a trustworthy manner, a critical resource as a larger fraction of our lives is now digital.102 Two other blockchain timestamp projects are Bitnotar and Chronobit. A similar blockchain-based project for contract signing is Pavilion.io, which provides the service much cheaper than Adobe EchoSign or DocuSign; contracts are free to send and only one mBTC to sign.103 Two other virtual notary projects are Blocksign and btcluck.

Monegraph: Online Graphics Protection

One digital-art protection project built and intended as a proof of concept using the blockchain ledger Bitcoin 3.0 applications related to new methods of proof is Monegraph, whose slogan is “because some art belongs in chains.” Using this (currently free) application, individuals can facilitate the monetization of their online graphics—digital media they have already created and posted on the Web—by registering their assets. Just as Bitcoin verifies currency ownership, Monegraph verifies property ownership; this is an example of the smart property application of the blockchain. Monegraph could be a complementary service or feature for stock photo image and graphic repository websites like Shutterstock or Getty Images, possibly adding future functionality related to image use enforcement and tracking.

Monegraph works in a two-step process using Twitter, Namecoin, and Monegraph. Namecoin is used because it is an altcoin that can be used to verify DNS registrations in an automated, decentralized way; any similar DNS confirmation service could be used.104 First, to stake the claim, the user goes to http://www.monegraph.com/, gives it permission to sign in to her Twitter account (via the standardized Twitter API OAuth token), and supplies the URL of the graphic, upon which Monegraph automatically tweets a link to that image in the correct format. Second, to record the title, after Monegraph tweets the link to the image, it provides a block of code for the user to copy and paste into the Namecoin client. The user initiates a new transaction in the Namecoin wallet and adds the block of code as the key and value in the Namecoin transaction (you can see the transaction here: http://bit.ly/monegraph_verification). Only one copy of a digital image can ever have a valid Monegraph signature. Monegraph images are just ordinary image files, so they can be duplicated and distributed like any other images, but only the original file will pass validation against the Monegraph system.

A related digital art and copyright protection project is Ascribe, which is aimed at providing an underlying infrastructure for IP registry. The company is building what it calls an “ownership layer” for digital property in the form of a service to register and transfer copyright. Although existing copyright law offers creators protection against infringement and the right to commercialize, there is no simple, global interface to register, license, and transfer copyright. The Ascribe service aims to address this, registering a digital work with the service hashes and timestamping it onto the blockchain. An earlier step in the registration process uses machine learning to detect and resolve any prior-art challenges. Ownership rights can then be transferred, which enables secondary markets for digital IP. The service handles digital fine art, photos, logos, music, books, blog posts, tweets, 3D CAD files, and more. Users need no prior knowledge of the intricacies of the blockchain, copyright law, or machine learning to benefit from the service. The bulk of Ascribe’s users are marketplaces and white-label web services that use Ascribe in the background, though individual users can use the site directly, as well.

Digital Asset Proof as an Automated Feature

In the future, digital asset protection in the form of blockchain registry could be an automatically applied standardized feature of digital asset publication. For certain classes of assets or websites, digital asset protection could be invoked at the moment of publication of any digital content. Some examples could include GitHub commits, blog posts, tweets, Instagram/Twitpic photos, and forum participations. Digital asset protection could be offered just as travel insurance is with airline ticket purchases. At account setup with Twitter, blogging sites, wikis, forums, and GitHub, the user could approve micropayments for digital asset registration (by supplying a Bitcoin wallet address). Cryptocurrency now as the embedded economic layer of the Web provides microcontent with functionality for micropayment and microIPprotection. Cryptocurrency provides the structure for this, whether microcontent is tokenized and batched into blockchain transactions or digital assets are registered themselves with their own blockchain addresses. Blockchain attestation services could also be deployed more extensively not just for IP registry, but more robustly to meet other related needs in the publishing industry, such as rights transfer and content licensing.

Batched Notary Chains as a Class of Blockchain Infrastructure

It is important to remember that this is only the outset of what could blossom into a full-fledged blockchain economy with blockchain technology enabling every aspect of human endeavor, the blockchain being like the Internet, and the blockchain as the fifth wave of the Internet. In this vein, it is possible that all current blockchain-related activity could be seen as early-stage prototypes looking back from some future moment. What are piecemeal services now could be collected into classes of blockchain services.

From the point of view of overall design principles for the blockchain infrastructure, we would expect to see these classes of sector-specific functionality arriving. Not just separate blockchain notary services, but a new class of notary chains themselves as part of the evolving blockchain infrastructure. Notary chains are an example of a DAO/DAC, a more complicated group of operations that together perform a class of functions incorporating blockchain technology. In this case, this is the idea of notary chains as a class of blockchain protocols for attestation services. For example, it might be more efficient to post batches of transactions as opposed to every individual transaction (requiring the greater-than-zero mining cost). Notary blocks could be composed of the hashes of many digitally notarized assets; the blocks themselves could then be hashed so that the notary block is the unit that is inscribed into the blockchain, making more efficient use of the system rather than every single digital artifact that has been notarized. Because hashes are a one-way function, the existence of the block-level hash in the Bitcoin blockchain constitutes proof of the existence of the subhashes.105 Moving blockchain design into such an “industrial” DAO/DAC phase brings up interesting questions about how the optimal mix of hierarchical and decentralized architectures will play out in large-scale design architectures. Factom is a project developing the idea of batched transaction upload in blocks to the blockchain, using the blockchain attestation/notary hash functionality to batch transactions as a means of avoiding blockchain bloat.

Personal Thinking Blockchains

More speculatively for the farther future, the notion of blockchain technology as the automated accounting ledger, the quantized-level tracking device, could be extensible to yet another category of record keeping and administration. There could be “personal thinking chains” as a life-logging storage and backup mechanism. The concept is “blockchain technology + in vivo personal connectome” to encode and make useful in a standardized compressed data format all of a person’s thinking. The data could be captured via intracortical recordings, consumer EEGs, brain/computer interfaces, cognitive nanorobots, and other methodologies. Thus, thinking could be instantiated in a blockchain—and really all of an individual’s subjective experience, possibly eventually consciousness, especially if it’s more precisely defined. After they’re on the blockchain, the various components could be administered and transacted—for example, in the case of a post-stroke memory restoration.

Just as there has not been a good model with the appropriate privacy and reward systems that the blockchain offers for the public sharing of health data and quantified-self-tracking data, likewise there has not been a model or means of sharing mental performance data. In the case of mental performance data, there is even more stigma attached to sharing personal data, but these kinds of “life-streaming + blockchain technology” models could facilitate a number of ways to share data privately, safely, and remuneratively. As mentioned, in the vein of life logging, there could be personal thinking blockchains to capture and safely encode all of an individual’s mental performance, emotions, and subjective experiences onto the blockchain, at minimum for backup and to pass on to one’s heirs as a historical record. Personal mindfile blockchains could be like a next generation of Fitbit or Apple’s iHealth on the iPhone 6, which now automatically captures 200+ health metrics and sends them to the cloud for data aggregation and imputation into actionable recommendations. Similarly, personal thinking blockchains could be easily and securely recorded (assuming all of the usual privacy concerns with blockchain technology are addressed) and mental performance recommendations made to individuals through services such as Siri or Amazon’s Alexa voice assistant, perhaps piped seamlessly through personal brain/computer interfaces and delivered as both conscious and unconscious suggestions.

Again perhaps speculatively verging on science fiction, ultimately the whole of a society’s history might include not just a public records and document repository, and an Internet archive of all digital activity, but also the mindfiles of individuals. Mindfiles could include the recording of every “transaction” in the sense of capturing every thought and emotion of every entity, human and machine, encoding and archiving this activity into life-logging blockchains.

Blockchain Government

Another important application developing as part of Blockchain 3.0 is blockchain government; that is, the idea of using blockchain technology to provide services traditionally provided by nation-states in a decentralized, cheaper, more efficient, personalized manner. Many new and different kinds of governance models and services might be possible using blockchain technology. Blockchain governance takes advantage of the public record-keeping features of blockchain technology: the blockchain as a universal, permanent, continuous, consensus-driven, publicly auditable, redundant, record-keeping repository. The blockchain could become both the mechanism for governing in the present, and the repository of all of a society’s documents, records, and history for use in the future—a society’s universal record-keeping system. Not all of the concepts and governance services proposed here necessarily need blockchain technology to function, but there might be other benefits to implementing them with blockchain technology, such as rendering them more trustworthy, and in any case, part of a public record.

One implication of blockchain governance is that government could shift from being the forced one-size-fits-all “greater good” model at present to one that can be tailored to the needs of individuals. Imagine a world of governance services as individualized as Starbucks coffee orders. An example of personalized governance services might be that one resident pays for a higher-tier waste removal service that includes composting, whereas a neighbor pays for a better school package. Personalization in government services, instead of the current one-size-fits-all paradigm, could be orchestrated and delivered via the blockchain. One example of more granular government services could be a situation in which smart cities issue Roadcoin to compensate passing-by drivers for lost #QualityofLife in road construction projects. Likewise, there could be Accidentcoin that those involved in an accident pay to similarly compensate passing-by drivers for lost #QualityofLife; payment could be immediate, and shifted later as insurance companies assess blame.

In science-fiction parlance, it could be said that franchulates as envisioned in Neal Stephenson’s Snow Crash are finally on the horizon.106 Franchulates are the concept of a combination of a franchise and consulate, businesses that provide fee-based quasigovernmental services consumed by individuals as any other product or service, a concept that blockchain governance could make possible. One attractive aspect of the franchulates concept is the attitudinal shift: the idea that governments need to become more like businesses and less of a default monopoly provider of government services; they should have a more proactive relationship with consumer-citizens, offering value propositions and services that are demanded and valued by different market segments of constituents.

Another implication of blockchain governance is that one vision behind “government on the blockchain” or “putting a nation on the blockchain” is that a more truly representative democracy might be obtained. One way of effectuating this is, rather than having to rely on human agents as representatives, using blockchain smart contracts and DACs. Having many fewer people involved in the governance apparatus could potentially mean smaller, less costly government, less partisanship, and less special-interest lobbyist-directed government. As blockchain technology makes financial systems more efficient, squeezing the marginal cost down to zero, so too could blockchain technology reconfigure the tasks of governance and public administration. The costs savings of smaller government could proceed directly to Guaranteed Basic Income initiatives, promoting equality and political participation in society and easing the transition to the automation economy.

The advent of the blockchain and decentralized models calls into question more generally the ongoing validity of population-sized pooled models like government and insurance that have been de facto standards because other models were not yet possible. However, pooled models might no longer make economic or political sense. Consensus-driven models could be a superior solution economically and offer a more representative and equitable way of interacting with reality, moving to an open frame of eradicating situations of illiberty.107 The blockchain-as-an-information-technology idea is further underscored in blockchain governance as a new, more efficient system for organizing, administering, coordinating, and recording all human interactions, whether business, government, or personal. The advent of blockchain technology calls into question the more effective execution of government services, but also government-backed rights, which in some cases by design do not (and should not) respect individuality. So far, most projects have addressed only the governance services side, so there is an opportunity to develop interesting blockchain-based models for rights enforcement.

Decentralized Governance Services

Choose your government and choose your services. This is the idea of putting the nation-state on the blockchain, in the sense of offering borderless, decentralized, opt-in blockchain-based governance services.108 These kinds of services could include an ID system based on reputation, dispute resolution, voting, national income distribution, and registration of all manner of legal documents such as land deeds, wills, childcare contracts, marriage contracts, and corporate incorporations. In fact, the blockchain—with its structure that accommodates secure identities, multiple contracts, and asset management—makes it ideal for situations such as marriage because it means a couple can tie their wedding contract to a shared savings account (e.g., a Bitcoin wallet) and to a childcare contract, land deed, and any other relevant documents for a secure future together.109

Indeed, the world’s first blockchain-recorded marriage occurred at Disneyworld, Florida, on October 5, 2014 (Figure 3-2). The marriage was submitted to the Bitcoin blockchain, using the blockchain’s property of being an online public registry. The vows were transmitted in the text annotation field, embedded in a Bitcoin transaction of 0.1 Bitcoins ($32.50), to appear permanently in the blockchain ledger.110 Liberty.me CEO Jeffrey Tucker officiated at the ceremony and discussed the further benefits of denationalized marriage in the context of marriage equality, how marriage can be more equitably and permissively recorded and recognized in a blockchain than in many states and nations at present.111 One indication that the “blockchain as public documents registry” has truly arrived would be, for example, if there were to be corresponding Bitcoin prediction markets contracts for events in the couple’s life, such as having children, purchasing real estate, and even potentially filing for divorce (which would also be logged on the blockchain), and the inevitable social science research to follow showing that blockchain marriages last longer (or not) than their religious or civil counterparts.

World’s first Bitcoin wedding, David Mondrus and Joyce Bayo, Disneyworld, Florida, October 5, 2014 (image credit: Bitcoin Magazine, RubenAlexander)

Figure 3-2. World’s first Bitcoin wedding, David Mondrus and Joyce Bayo, Disneyworld, Florida, October 5, 2014 (image credit: Bitcoin Magazine, Ruben Alexander)

Blockchain-based governance systems could offer a range of services traditionally provided by governments, all of which could be completely voluntary, with user-citizens opting in and out at will. Just as Bitcoin is emerging as a better alternative to fiat currency in some situations (cheaper, more efficient, easier to transmit, immediately received, and a superior payments mechanism), the same could be true for blockchain-based governance services. The same services a traditional “fiat” government carries out could be delivered in a cheaper, distributed, voluntary way by using blockchain technology. The blockchain lends itself well to being a universal, permanent, searchable, irrevocable public records repository. All government legal documents such as deeds, contracts, and identification cards can be stored on the blockchain. Identity systems such as blockchain-based passports would need to achieve critical mass adoption in order to be recognized, just as Bitcoin does in the case of being recognized and being widely usable as money. One project that provides the code for a blockchain-based passport system is the World Citizen project.112 The project aims to create world citizenship through affordable decentralized passport services by using available cryptographic tools (Figure 3-3).

The World Citizen Project’s Blockchain-based passport

Figure 3-3. The World Citizen Project’s Blockchain-based passport (image credit: Chris Ellis)

A key point is that anyone worldwide can use decentralized government services; just because you live in a particular geography should not restrict you to certain government services and mean that you have only one government provider. Governments have been a monopoly, but with blockchain government services in the global Internet-connected world, this need not be the case any longer. The possibility of global currencies like Bitcoin and global government services bring up important questions about the shifting nature of nation-states and what their role should be in the future. A country might be something like a hometown, where you are from, but not in sharp relief in day-to-day activities in a world where currency, finance, professional activities, collaboration, government services, and record keeping are on the blockchain. Further, Bitcoin provides a transition to a world in which individuals are increasingly mobile between nation-states and could benefit from one overall governance system rather than the host of inefficiencies in complying with multiple nation-states. As is standard with cryptocurrency code, decentralized governance software, too, would be open source and forkable, so that anyone can create his own blockchain nation and government services in this collaborative platform for DIYgovernance.

In the area of titling and deeds, as Bitcoin is to remittances, decentralized blockchain government services is to the implementation of a property ownership registry, and could be the execution of the detailed plans set forth by development economists such as Hernando de Soto.113Decentralized blockchain-based government services such as public documents registries and titling could be a useful tool for scaling the efforts already in place by organizations such as de Sotos’s Institute for Liberty and Democracy, or ILD, which has programs to document, evaluate, and diagnose the extralegal sector and bring it into alignment with the legal system. A universal blockchain-based property registry could bring much-needed ownership documentation, transferability, transactability, value capture, and opportunity and mobilization to emerging markets where these structures do not exist or are nascent (and simultaneously, potential business for its blockchain service cousin, dispute resolution). As some countries in Africa were able to leapfrog directly to cellular telephone networks without installing copper wire infrastructure (and some countries might be able to leapfrog directly to preventive medicine with personalized genomics114), so too could emerging-market countries leapfrog directly to the implementation of blockchain property registries. Other blockchain government services could facilitate similar leapfrogging—for example, speeding Aadhar’s (the world’s largest biometric database115) efforts in issuing national ID cards to the 25 percent of Indians who did not have them, and helping to eliminate inefficiencies in national ID card programs due to issues like ghost IDs and duplicate IDs.

PrecedentCoin: Blockchain Dispute Resolution

Another Blockchain 3.0 project focuses exclusively on using the blockchain for more effective dispute resolution. Precedent is conceptually like “The People’s Court or Judge Judy on the blockchain.” So far there has been no way to take advantage of a centralized repository of precedents used to resolve disputes, so Precedent is developing a concept, framework, altcoin, and community to implement a decentralized autonomous legal procedure organization (as described in further detail in “The Precedent Protocol Whitepaper.” Precedent’s “polycentric decentralized legal system” makes it possible for individual users to pick the legal system and features they like, emphasizing the ongoing theme of blockchain-enabled personalization of governance and legal systems. The Precedent legal/dispute-resolution community is incentivized to develop with the community coin, PrecedentCoin or nomos.

In the same way that a decentralized community of miners maintains the Bitcoin blockchain by checking, confirming, and recording new transactions, so too functionally do “dispute precedent miners” in the Precedent community by entering new disputes, resolved disputes, and precedents on the dispute resolution blockchain (the blockchain entries are links to securely stored off-chain content with the dispute/precedent details). Precedent runs as a blockchain metaprotocol overlay (structurally like Counterparty). Proof of precedent is envisioned as part of the system’s consensus mechanism (analogous to proof of work or proof of stake in Bitcoin mining). The Precedent system is radically peer-to-peer; users dictate what it means for a dispute to be justiciable (appropriate or suitable for adjudication), and they can fork the protocol if new standards are deemed preferable. The tokenized altcoin, Precedentcoin or nomos, is used for community economic functions like paying to submit a dispute to the network and remunerating “miners” for community dispute resolution tasks (conceptually like community “jurors” or “citizen dispute resolvers”).

It should be noted that, as the project points out in a white paper, “The Precedent Protocol is strictly concerned with the justiciability of the dispute in question and is wholly agnostic to the justness or fairness of the outcome.” Thus, there is potential risk for abuse, in the form of buying or collectively achieving a strange or unfair decision by consensus. The project aims to decide only the justiciability of a dispute—the point of law, not the point of fact.

Liquid Democracy and Random-Sample Elections

Other blockchain governance efforts focus more directly on developing systems to make democracy more effective. In the model of a DAS (distributed autonomous society), there could be a need to set forth standardized principles for consensus-based decentralized governance systems, and decentralized voting systems such as that offererd by BitCongress.116 Other projects focus on other ideas such as delegative democracy, a form of democratic control where voting power is vested in delegates, as opposed to representatives (as many congressional and parliamentary models today). One such project is Liquid Democracy, which provides open source software to facilitate proposition development and decision making.

In the Liquid Democracy system, a party member can assign a proxy vote to any other member, thereby assigning a personal delegate instead of voting for a representative. A member can give her vote to another member for all issues, for a particular policy area, or for only a particular decision for any length of time. That vote can be rescinded at any time. Under this system, a person can become a delegate for multiple members within a polity very quickly, wielding the political power normally reserved for elected representatives as a result. But, a person can lose this power just as quickly. This is the “liquid” in Liquid Democracy, a process that can also be referred to as “transitive delegation.” If someone is respected as a trusted expert in a particular area, he can gain members’ votes. As a result, every person within a Liquid Democracy platform is a potential politician.117 There are clearly many potential issues with the Liquid Democracy platform as currently set forth. One concern is stability and continuity over time, which could be resolved with agent reputation mechanisms, broadly confirmable and transferrable if stored in an accessible blockchain.

The idea of delegated decision making, supported and executed in blockchain-based frameworks might have wide applicability beyond the political voting and policy making context. For example, health is another area for which advocacy, advice, and decision making are often delegated and poorly tracked with almost no accountability. Blockchain technology creates an opportunity for the greater accountability and tracking of such delegation. For example, the bioethical nuances of delegated medical decision making articulated in the book Deciding for Others, by Allen Buchanan, could be implemented in Liquid Democracy structure.118 This could improve health care–related decision making, and enable a system of decentralized advocacy, as many individuals do not have adequate informed advisors on hand to act on their behalf. In the farther future, cultural technologies such as the blockchain could become a mechanism for applied ethics.

Liquid Democracy is also a proposition development platform. Any member can propose a new idea. If enough other members support the proposition, it moves on to a discussion phase, at which point it can be modified and alternatives put forward. Of the proposals that are offered, those with enough support are put up for a vote. A vote is made using the Schultz method of preferential voting, which ensures that votes are not split by almost identical “cloned” proposals (like double-spend problem for votes). All of this is coordinated in the online platform. The voting system can run at different levels of transparency: disclosed identity, anonymity, or a hybrid system of authenticated pseudonymity. An unresolved issue is how binding decisions made by the Liquid Democracy system might be and what enforcement or follow-up mechanisms can be included in the software. Perhaps initially Liquid Democracy could serve as an intermediary tool for coordinating votes and indicating directional outcomes.

Ideas for a more granular application of democracy have been proposed for years, but it is only now with the Internet and the advent of systems like blockchain technology that these kinds of complex and dynamic decision-making mechanisms become feasible to implement in real-world contexts. For example, the idea for delegative democracy in the form of transitive voting was initially proposed by Lewis Carroll (the author of Alice in Wonderland) in his book The Principles of Parliamentary Representation.119

Random-Sample Elections

In addition to delegative democracy, another idea that could be implemented with blockchain governance is random-sample elections. In random-sample elections, randomly selected voters receive a ballot in the mail and are directed to an election website that features candidate debates and activist statements. As articulated by cryptographer David Chaum,120 the idea is that (like the ideal of a poll) randomly sampled voters would be more representative (or could at least include underrepresented voters) and give voters more time to deliberate on issues privately at home, seeking their own decision-making resources rather than being swayed by advertising.121 Blockchain technology could be a means of implementing random-sample elections in a large-scale, trustable, pseudonymous way.

Futarchy: Two-Step Democracy with Voting + Prediction Markets

Another concept is futarchy, a two-level process by which individuals first vote on generally specified outcomes (like “increase GDP”), and second, vote on specific proposals for achieving these outcomes. The first step would be carried out by regular voting processes, the second step via prediction markets. Prediction market voting could be by different cryptocurrencies (the EconomicVotingCoin or EnvironmentalPolicyVotingCoin) or other economically significant tokens. Prediction market voting is investing/speculating, taking a bet on one or the other side of a proposal, betting on the proposal that you want to win. For example, you might buy the “invest in new biotechnologies contract” as what you think is the best means of achieving the “increase in GDP” objective, as opposed to other contracts like the “invest in automated agriculture contract”). As with random-sampling elections, blockchain technology could more efficiently implement the futarchy concept in an extremely large-scale manner (decentralized, trusted, recorded, pseudonymous). The futarchy concept is described in shorthand as “vote for values, bet on beliefs,” an idea initially proposed by economist Robin Hanson,122 and expounded in the blockchain context by Ethereum project founder Vitalik Buterin.123 This is a quintessential example of the potential transformative power of blockchain technology. There is the possibility that voting and preference-specification models (like futarchy’s two-tiered voting structure using blockchain technology) could became a common, widespread norm and feature or mechanism for all complex multiparty human decision making. One effect of this could be a completely new level of coordinated human activity that is orders of magnitude more complex than at present. Of course, any new governance structure including futarchy has ample room for abuse, and mechanisms for restricting coercion and outright results hacking are incorporated to some degree but would need to be improved upon in more robust models.

For the agreed-upon consensus necessary to register blockchain transactions, there could be at least two models, and potentially many more in the future. The first consensus mechanism is the mining operation: with the aid of software, miners review, confirm, and register transactions. The second consensus mechanism is prediction markets. An event might be assumed to be true if enough independent unaffiliated persons have voted their opinion that it is true in a prediction market. Truthcoin is such a blockchain-based, trustless, peer-to-peer prediction marketplace that hopes to resolve some problems with traditional prediction markets, such as bias in voters, and integrate the prediction market concept with the remunerative coin and public records structure of Bitcoin.124 Even farther, Truthcoin aims to provide a trustless oracle service, registering what might be relevant events of record in the blockchain. Some examples of “information items” of interest would be the current interest rate, the daily high temperature, and cryptocurrency daily high and low prices and trading volume. For blockchain-based smart contract operations, independent oracles providing information are a key component in the value chain. For example, blockchain-based mortgage might have certain interest rate reset dates in the future that could be automatically implemented upon having a trustable source of future information, such as that registered in a blockchain by a reputable independent oracle, like Truthcoin.

Societal Maturity Impact of Blockchain Governance

A side benefit of blockchain governance is that it might force individuals and societies to grow into a new level of maturity in how topics like governance, authority, independence, and participation are conceptualized and executed. We are not used to governance being a personal responsibility and a peer-to-peer system as opposed to something externally imposed by a distant centralized institution. We are not used to many aspects of blockchain technology, like having to back up our money, but we learn appropriate savviness and new behaviors and conceptualizations when adopting new technologies. We are not used to decentralized political authority and autonomy.

However, we have matured into the reception of decentralized authority in other contexts. Authority floating freely has already happened in other industries such as information, wherein the news and publishing industry became decentralized with blogging and the restructuring of the media industry. Entertainment is similar, with corporate media properties existing alongside YouTube channels, and individuals uploading their own content to the Web. The value chain has exploded into the long-tail format, and individuals became their own taste makers and quality arbiters. A crucial twenty-first-century skill is that individuals must examine content and think for themselves about its quality and validity. The Bitcoin revolution is the same thing happening now with currency, economics, finance, and monetary policy. It might seem harder to let go of centralized authority in matters of government and economics as opposed to culture and information, but there is no reason that social maturity could not develop similarly in this context.