To date, a comprehensive discussion of possible blockchain-based models of governance does not yet exist at academic level. Since a coherent and consistent body of thought on this subject is missing, for the purpose of our paper we have collected information from a number of sources as accurately as possible, though probably in a non-exhaustive manner. Swan (2015) represents a valuable point of reference for our analysis, since she offers a detailed and complete overview of possible applications of the blockchain technology, including government services. Some assumptions, proposals and visions presented below have arisen through the Internet within a growing global network of new technologies supporters, developers and entrepreneurs; other ideas instead seem to be recurrent themes in conferences, blogs, forums and specialist websites, and for all we know they are not exclusively attributable to a specific author.
That said, the main principles of blockchain-based governance can be summarized as follows:
- Centralized organizations and the problem of scale.
Throughout history, centralized political organizations like State, bureaucracy and representative democracy have been a solution to a scaling problem. They have been mostly developed for the purpose of reaching consensus and coordination between heterogeneous or distant groups of people, facilitating their mutual interactions.
- State as a Single Point of Failure (SPOF).
Although they were built in response to specific historical necessities, organizations with top-down centralized coordination and hierarchical structures tend to be inherently inefficient: they are based on coercion and they may lack flexibility and capacity to evolve, providing inadequate responsiveness to challenges and to the growing societal demands.
In particular, governments are proved to be systematically exposed to significant risks, such as lack of transparency, corruption, regulatory capture, misuse of power and even regression into authoritarianism, due to the concentration of power in the hands of few. Which leads to the classic matter: “Quis custodiet ipsos custodes?” (Who will watch the watchmen?).
A centralized authority in any hierarchical organization can be defined in computer terms as a Single Point of Failure (SPOF): if its functioning is not optimal, the whole system and its participants will be negatively affected by it. Decentralization aims to reduce or prevent such concentration of power and it is a fundamental condition for citizens to achieve political efficacy, equality, transparency, and freedom.
- Distributed architecture and trust-by-computation:“Code is law”14
Centralized vertical authority has become the main organizational model in society, simply because there has not been a better alternative so far. For the first time in history, citizens can now reach consensus and coordination at global level through cryptographically verified peer-to-peer procedures, without the intermediation of a third party.
The blockchain technology ushers in a new era of decentralization on large-scale, in which human factor is minimized and trust shifts from the human agents of a central organization to an open source code. In such distributed architecture, “code is law”: the protocol is open-source and it can be review by anyone; the network is not owned nor controlled by any single entity; data are simultaneously kept by all nodes, thus ensuring proper redundancy.
Neutrality of the code, distributed consensus and auditability of transactions can significantly reduce or overcome frictions and failures inherent in decision-making process of centralized organizations (e.g. lack of transparency, corruption, coercion, etc.).
Many new decentralized governance models and services can therefore be implemented and experienced through the blockchain, without the oversight of governments (Swan,
- Power of individuals and politics by instant, atomic interactions.
While the State bases its action on coercion, the blockchain can provide governance services in a more efficient and decentralized way, without having to relying on force. This allows a more horizontal and distributed diffusion of authority, in which the source of legitimacy are the individuals themselves. Using the blockchain as a permanent, encryption-secured public record repository, humans agents as representatives can be replaced by smart contracts and Decentralized Autonomous Corporations (Swan, 2015). The collective relationship between individuals and the State can be fully or partially automated by “a series of instant atomic interactions”.
- Putting a nation on the blockchain: a Starbucks-style public administration.
The blockchain technology allows more granular and personalized government services. Using the blockchain as a permanent public records repository, it is possible to store all government legal documents, such as contracts, identification cards, passports, lands deeds, etc. in a cheaper, more efficient and decentralized way.
Anyone can create its own blockchain nation and a decentralized do-it-yourself-governance system “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”
“Governments 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”
“Through simply downloading an app on your smartphone, you can choose your code of law, your preferred arbitration method, write a smart contract, and get married, title your land, notarize a will, incorporate a company, get health insurance, and much more, in just a few minutes for a couple of dollars. It is backed by an ID and reputation system, dispute resolution, and an app library where people can upload and share or sell their own do-it-yourself governance apps”
- Borderless, globalized government services.
Through the blockchain, governance services can also become global and border-less. “The idea is to uplift transnational organizations from the limitations of geography-based, nation-state jurisdiction to a truly global cloud”
“Just because you live in particular geography should not restrict you to certain governments services and mean that you have only one government provider”. Indeed,
“individuals are increasingly mobile between nation-state and could benefit from one overall governance system rather than the host of inefficiencies in comply with multiple nation-state”.