Blockchain as a governance model for open organizations

Its taken a few years of percolating but I am starting to understand how the blockchain can be used as transformative technology in non-financial contexts.

You won’t read any math here. Mostly because I don’t know it. But also because I think that’s the point. I’ve been trying to identify a historical antecedent for this type of technology. The joint stock company jumps to mind – in the way that joint stock allowed risk to be controlled, blockchain allows trust to be controlled. Pushing the metaphor, I am trying to take a long gaze on the impact of blockchain, and not get distracted just because we have a new kind of contract.

Blockchain is important because it unlocks a new kind of governance based on the real involvement of parties in the system. This style of governance contrasts sharply with two of the prevailing models in open source, Benevolent Dictator For Life and decision by consensus, because it makes power a pure function of productivity.

If you aren’t familiar with Bitcoin mining, Quartz has a great explainer. Here’s the key excerpt:

Mining’s ultimate purpose is to prevent people from double-spending bitcoins. But it also solves another problem. It distributes new bitcoins in a relatively fair way—only those people who dedicate some effort to making bitcoin work get to enjoy the coins as they are created.

Forget the computational aspect of mining and focus on that last clause – “only those people who dedicate some effort to making bitcoin work get to enjoy the coins as they are created.” That gets me going! A system designed to allocate power based on real work. We’ve all experienced times when the power we had in a situation was more or less than what we thought we deserved. What if instead of assumption, we had math?

Here are two practical examples of how such a governance model could be applied to an open or community-based organization.

  • Local news startup. I am bootstrapping a local news startup and want to assemble a founding editorial group. Traditional equity doesn’t make sense because we don’t know what the business is, and we don’t want to form a contract for long-term involvement. Instead, we use a blockchain to allocate “equity” (functionally equivalent to power) based on the real editorial activity of participants – maybe using some combination of quantity and quality metrics for articles published. I think this model would take a lot of courage as a founder! It acknowledges that you might not always be the power, and actually provides a natural mechanism for transfer of power on a granular and ongoing basis.
  • WordPress. Matt Mullenweg very graciously responded to my tweets yesterday regarding WordPress and the Gutenberg project.

    The background is that Matt (the creative genius behind also runs Automattic (the for-profit company behind Matt recently stepped back into the .org world to be a release lead, as he felt that Core development had fallen behind the rest of the web in recent years.

    WordPress is one of the most successful open source projects in the world and it takes a lot of naivety for me to suggest that I could improve on its governance, which is the product of many thoughtful and talented people whom I respect greatly. But I think it is prima facie that the sausage-making process can alienate even the most committed developer (or to put it another way, even the developers who commit the most).

    WordPress as a system sees value generated in a number of ways. Core is paramount, but think of the other ways that participants can add value out side of personal contributions. Companies can donate Five for the Future or cash to the WordPress Foundation. Support forums need tending, plugins need reviewing, themes need auditing, etc.

    What would change if these parties were given decision-making value (power) based on their real contributions? It seems that personalities might become somewhat less important in architectural debates if decisions were made jointly rather than by fiat of the release lead. It would also give the corporations and individuals who donate time and money to the project some assurance that they had a stake in the future direction of the project.

One problem with this approach is that the “power” accumulated in the blockchain might snowball, making it hard to unseat the project creator or another incumbent. My solution is to implement a TTL on the power so that the credits expire on some normal schedule, perhaps a log function of some kind.

It’s also conceivable that within this model there’s some concept of “preferred stock” or power not subject to the TTL. I’m still thinking through that part.

Anyway, this is half-baked but I think it captures the spirit of the idea. Lemme know what you think in the comments!

Image via Coinbase.

Posted Jun. 27 2017, 6:31 am by davis