#distributed governance

संघ / Saṅgha (collective), when approached not as a sociological aggregation of individuals nor as an institutionalised religious body but as a dynamically self-organising field of सम्बन्ध / sambandha (relation) grounded in the mutual recognition of प्रतीत्यसमुत्पाद / pratītyasamutpāda (dependent origination), reveals itself as an insurgent form that operates orthogonally to the dominant logics…

by Andrea Castillo

The Ümlaut

January 21, 2014

Just when you thought you had comfortably wrapped your head around the whole Bitcoin thing, some restless coders up and add another layer of complexity to the world’s preferred brand of magical internet money. A new wave of decentralization may soon be upon us. Lusty possibilities abound.

More and more people are coming to understand Bitcoin as both a medium of exchange anda nifty (nerdy) payments and communications system. It is at once a currency, a platform, aprotocol, a network, an ethos. In freeing the channels of information transmission, decentralization unleashes latent creativity. A thing of beauty, but man can arguably not radically decentralize all human association by the Bitcoin protocol alone.

While public attention largely fixates on short-term price adjustments, community creators have long since turned to new frontiers in decentralization and exchange. Next on the docket are developments in Bitcoin-based corporate governance, derivatives markets, and information markets.  2014 could be a big year for these embryonic non-“currency”applications of the Bitcoin experiment.

The first thing we do, let’s kill all the managers

Are you ready for the firm’s own nature to make itself redundant? You’re not alone. Unwilling to settle for one mere revolution in the financial space, a subset of constitutional connoisseurs want to extend the decentralized logic and tools of Bitcoin to the stodgy world of corporate governance. They race against their own dreams of Distributed Autonomous Communities, or DACs, autonomous entities that pursue defined goals according to their own rules without a central point of control. 

The Bitcoin protocol itself can be thought of as the first DAC. Bitcoin holders are really just the “equity shareholders” of “Bitcoin, Inc.” Miners, the employees, suffer impressively few principal-agent conflicts–they vote with their hashrates. Corporate policy within the firm is universally-known and virtually non-violable. The conceptual elegance of this first “shareholder-owned, employee run, not-for-profit cryptocorporation” has been long admired.

Some believe DACs can be used to administer more than just smart money. If this sounds like a tall order, well, it’s because it is. Setting the right strings to coordinate distributed currency creation and transaction verification is one thing; anticipating and accounting for a nimble, dynamic, thoroughly modern corporation’s many needs and means and flowcharts and contingencies is quite another. Early dispatches hint at some cryptographic solutions.

It’s easy to conceptualize DACs through their figment agents’ stone code of conduct; like Asimov’s robots, Bitcoin’s DACs could be behaviorally bound by their own set of three incorruptible laws. This core secured, entrepreneurs could then optimally structure their DACs’ internal pressures (and outsource the rest) to decentrally provide courier, banking, identity, investment, legal, and even governmental services for fun and profit. The only limit is yourself–and maybe the sophistication of the machine learning algorithms that you can employ.

Many of the needed tools already exist. Assuming that a well-designed DAC can adequately “think” and generate and maintain capital–as the Bitcoin protocol does–the next challenge is properly navigating and interacting with relevant market data through time. A DAC that is unable to identify profit opportunities and consumer desires will be useless no matter how gorgeous its protocol’s design. Vitalik Buterin suggests that a combination of careful computational democracy and, say, a standard of signed API requests can respectively function as synthetic dynamic inputs and outputs of each DAC. (He also has some big ideas on how to best identify this new species of exquisite corpora). Strategic opinions differ, but the right questions are at least being simultaneously entertained. Ripple, Mastercoin, Namecoin,ProtoShares, and colored coins are a few examples of proto-DACs that are developing in real time....

*** 

[How will this permeation of network culture into systems of economic governance interoperate with primate paradigms of silverback power?  The modern business corporation is structured pretty much like a warlord band of late antiquity, and this structure is enshrined in law.