Evolving blockchain applications are presenting a challenge to traditional notions of state, citizenship and democracy. Is the decentralised nation just a utopian dream, or a realistic solution to the malaise of the modern day state?
Governments all over the world are warning of the potential dangers of cryptocurrency, citing extreme volatility, unproven technology and manic speculation as forces that not only threaten the financial stability of individuals but could even topple the global financial system. But is it just the financial risks that they are concerned with, or does the duplicitous attitude of governments and institutions conceal a deeper existential fear?
Blockchain has the potential to be a tremendously disruptive technology in fields greater than just the finance industry, and is beginning to be implemented in models of governance. Perhaps our governments are squirming because blockchain represents a threat to their very existence.
“Techno-libertarians and crypto-anarchists […] offer instead a utopian promise of social levelling by blockchain governance, and a society that doesn’t establish its power by supreme authority over a territory.”
Techno-libertarians and crypto-anarchists argue that the same technology that makes p2p transactions possible negates the need for centralised governance. These people tend to share a distrustful view of centralised institutions, considering the state unnecessary and parasitic.
They offer instead a utopian promise of social levelling by blockchain governance, and a society that doesn’t establish its power by supreme authority over a territory.
Challenging Territorial Sovereignty
The global political system is founded on the arguably flawed notion of sovereignty over territory. But where did this idea come from and is it really necessary?
History tells the story of a few maverick groups that have decoupled the idea of governance from a specific place and established notions of sovereignty without territory. And I’m not talking about drug cartels!
One such group is the Sovereign Military Order of Malta, which, with the exception of two HQ buildings in Rome, has had no territory since the loss of the island of Malta in 1798. Yet, it is widely regarded as a sovereign entity, and retains the traditional trappings of a country – passports, stamps, currency, military etc. As a religious order, their sovereign status was granted through the church.
“The borders and spatial models of centralized governance have become anomalies in a world that is ever more connected.”
Now blockchain is challenging territorial sovereignty not through religious might but through innovation. In fact, the whole idea of sovereign governance is a function of technology. Nation states are a product of the renaissance development of printed maps, a time when men rode horses in epic journeys across the land.
Now, in the days of airplanes crisscrossing the globe, the borders and spatial models of centralized governance have become anomalies in a world that is only becoming more connected. This opens up the possibility for sovereignty to be rooted in a realm that is not so earthly, a country tied to social and economic principles rather than territory.
“Blockchain is making it possible to encode incorruptible democratic principles into the fabric of the core mechanisms of a nation state.”
Blockchain is making it possible to encode incorruptible democratic principles into the fabric of the core mechanisms of a nation state. This is a technological breakthrough that could allow an independent authority to still be an independent subject of international law, without exercising exclusive control over a patch of land.
Decentralising Company Governance
A socioeconomic experiment in company governance, Ethereum’s DAO fired the first shot in this arena, creating a ‘distributed autonomous organisation’ that could be used to organise companies on the blockchain.
This was ostensibly an Ethereum ICO, but was revolutionary in that it formed a mechanism for company governance with no conventional management structure.
“Robots are generally more reliable than humans – a computer never hijacked a company or pilfered profits into their own pocket.”
This could promise for companies what the robotic revolution did for factory workers – it could replace them with technology. This is advantageous as robots are generally more reliable than humans – a computer never hijacked a company or pilfered profits into their own pocket (at least not yet).
However, the DAO suffered from other shortcomings. An immutable and incorruptible entity, the DAO launched on 30th April, 2016, and was hacked to death shortly after, losing $50 million of its crowdfunded money.
Putting a Nation on the Blockchain
Two years before the DAO tried to solve the problem of company coordination with the blockchain, a more ambitious project had tried to solve the problem of coordinating an entire country with the same technology.
Billing themselves as governance 2.0, the antidote to tyranny, BitNation announced their intention to build the world’s first Blockchain-powered virtual nation, a system that would provide all the traditional services of government, but in a decentralised way.
This would remove the middlemen of politicians, allowing the electorate to vote directly on governance issues they care most about. This could, theoretically, cast away all the corruption, opportunism and career politicians that have arguably plagued the first iteration of governance.
Yet this project, despite its noble ambitions, also fell victim to a lack of coordination among its members when disagreements on the governance structure led three members of the original clan to leave.
It is hardly surprising that such a revolutionary idea would face teething problems, but the project is still ongoing. But what if blockchain governance was approached from the bottom rather than the top?
Government Services on the Blockchain
Rather than replacing the state entirely, or offering an alternative, some countries are using blockchain technology to make existing government services more efficient. One of the countries Bitnation partnered with is Estonia.
“Instead of hitting the reset button on society at large, blockchain has been implemented as a solution from the bottom, solving existing problems through a blockchain-based solution that is better than the existing technology.”
They have helped Estonia develop its e-Residency Program, which has been used by citizens of the country for traditional tasks like registering births, marriages, and wills, and also to allow individuals from around the world to apply to become a virtual Estonian citizen (for business purposes).
Instead of hitting the reset button on society at large, blockchain has been implemented as a solution from the bottom, solving existing problems through a blockchain-based solution that is better than the existing technology.
So, is the decentralised dream worth pursuing? Can distributed consensus create a new and improved social contract?
Whether it will free us from oligarchy, or just create new submission to a blockchain overlord, this is going to be one interesting journey.
Addressing the problem of corruption, particularly in the developing world, is undoubtedly a noble cause. The World Bank estimates that each year US$20-40 billion, corresponding to 20-40% of official development assistance, is stolen through high-level corruption from public budgets in developing countries and hidden overseas. This consistently affects the poorest people in these countries.
Instead of relying on a financial paper trail, or god forbid, the integrity of politicians, blockchain governance, in whatever form it manifests itself, from a complete governmental overhaul to specific implementations, offers a serious solution to this problem. Its inherent transparency and accountability could help the more than 800 million people that still live in extreme poverty today.
llustrations by Kseniya Forbender
To contact the editor responsible for this story:
Margarita Khartanovich at [email protected]