Governance is Killing Blockchain

The promise of crypto was freedom, not more politics.

Yet another tale of drama was revealed in the blockchain world last week, this time for Sia. This is following endless infighting over the years amongst camps trying to take control the future of money — from Bitcoin debates with Roger Ver, to hardforks in Ethereum, and flat out scams in ICOs.

This was not the future we were promised. Remember the days when we pontificated about how crypto would eliminate petty human things, like pride, power, and politics? That it would make the world a better place, not just more of the same? Yet now, crypto drama is often nastier.

So what happened?

Greed. People are just trying to make power grabs as the financial coup occurs, revolting from some tyrants, in attempts to become the next tyrants. This will not make the world better.

We need to return to our roots, which is that the future of money is decentralization — money not controlled by any one, group, or whole. Instead, money that is controlled by nobody, yet everybody at the same time.

How do you do this?

100% Pure Economics

Governments are built on economic philosophies. Therefore, the most important piece is for a “system designer” to create an algorithm that they set in stone as the economic model of the cryptocurrency.

You can think of this algorithm as The Constitution, and once in place, cannot and should not be modified by any party — including the system designer. It is vital that we let these experiments play out, to measure which systems have higher success rates than others. Then, we can create new systems where we evolve on these designs and replay them.

But what if a system is already popular, and goes awry? Well, this is two fold part the problem.

  1. First, according to who is something wrong? That is back to politics.
  2. Second, because there is no land that citizens occupy in the crypto world, secession is purely voluntary and can’t spark resource wars — unless people still care about those digitally scarce resources, in which case, the economics of that system are still winning.

Okay, but really, what if we discover a better system?

Then great! A better system must always absorb the previous system, like Einsteinian physics and Newtonian physics. In this case, if your new system is actually better, then it needs to also provide an upgrade path for people to migrate forward.

And let us be clear here, this means if you are forking a system, then all those people get to keep their coins. No “haha suckers you’re too late to the party” attitudes. You ought not use it to give yourself an unfair advantage.

If a group of people had power in the previous version, and if someone simply doesn’t like that, then forking them out of existence is going to be win-lose. Having such a win-lose system will necessarily lose out to any game designer who can create win+win systems. In fact, additive-only mechanics are the inevitable and only long term sustainable and viable solutions.

Just think about the economics of it! Now go build one.

Need help testing your hypothesis? I’m happy to be your guinea pig! Ping me on the tweetar, or follow me for riveting discussions around the future of economics and to see the technology we’ve built that already powers millions of users yesterday at scale in production.

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Governance is Killing Blockchain was originally published in Hacker Noon on Medium, where people are continuing the conversation by highlighting and responding to this story.

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