Ethereum, a newcomer this year on the Bitcoin scene caught my eye this weekend. What I like about it is that it’s talking about the future block-chain enabled world that has been introduced by Bitcoin, the true innovation of Bitcoin. If you know nothing about Bitcoin or want to get a update on the latest state of the industry, I highly recommend you read the white paper.
But the reason I am posting about this is because it talks about one of my other favourite new concepts for the future world: liquid democracy. And it combines it together, under the topic of Decentralised Autonomous Corporations (DAC’s), which I often hear in Bitcoin literature but I’ve only come to appreciate today how they would practically work.
In short, mind blown. Liquid democracy and DAC’s represent two of the most groundbreaking advances in the fields of governance in the last decade.
Let me give you a scenario of how these three inventions: Blockchain, liquid democracy, and DAC’s would work.
Imagine an organisation such as a government district representing you or the local supermarket store. Now continue this thought experiment and that you and 999 other people are ‘stakeholders’: as a citizen that can elect a representative or you are a member of the organisation that can elect a board of directors, like how non-profits and as for-profits do as shareholders.
Every one of these stakeholders has a “key” and under the principles of DAC’s, if any one of the 551 of the 1000 stakeholders make a vote, it creates a binding decision on the organisation. That itself isn’t the remarkable thing: what’s mind-blowing is that it’s done automatically through “secure multiparty computation”, allowing real time decisions to be processed by computers reflecting the will of the stakeholders.
Now combine that with the concepts under liquid democracy, where these stakeholders can directly vote on any issue — but can also delegate their vote to someone. This concept is called “delegative democracy” and is like a hybrid of the concepts of direct democracy (where citizens get a direct vote) and representative democracy (where citizens elect a representative) — hence the apt term liquid as the direct vote can be delegated to a representative and reverted back to the actual voter in a very fluid way.
And finally, let’s tie this to the blockchain that Bitcoin has introduced to the world: a way to validate decisions.
So let’s say one day, you get an email from your community saying you need to vote on whether to allow a new super market in the area. Or a vote to determine if the super market should sell alcohol. Currently, these decisions are made by shareholders and citizens by their representatives such as management who are appointed by the elected board of directors or elected representatives.
But under the above scenario, you get a direct vote on the matter — along with your 999 other stakeholders. However, assuming you don’t want to vote, you can allocate your vote to someone else which generalise’s the concept of a board of directors.
If the above doesn’t rattle your brain with its possibilities from how Fortune 500’s operate to the federal government could transform the way they operate from dictatorships disguised as fake democracy where elections simply give the perception of democracy, then it’s because you need to better understand the concepts.
That the (Bitcoin-invented) Block chain is a like decentralised receipt book of transactions that can prove decisions without the need for lawyers, liquid democracy is a new way to make decisions that evolves our current concepts behind direct and representative democracy, and the principles behind DAC’s means we cut the need for people making decisions on our behalf as cryptography has invented a way to determine a group of people (who are pre-authorised) to make decisions in real time.
The significance of Bitcoin is not that it invented this future, but it inspired it as it’s a the first version of DAC in existence today. Where an entire financial system is controlled by the people, not a government or bank. Humans are replaced by computer algorithms and therefore enabling a decentralisation of power to the very people who are meant to have that power: you and me.