Governance

Comments (Archived):

1. this world is inevitable. looking forward to the first blockchain to have a national anthem. (voted upon, of course). i wonder if eventually the blockchains will need to have military power. i used to think they could get by totally non-violently, just by turning off people’s wallets and such. but increasingly i think governmental authority will, regrettably, need to derive some of its backing from the threat of physical violence — at least much futher down the road when it is clear these systems have usurped the role of societal governance from the nation-state system.

   1. Not far fetched, but I’d love to see supra national entities emerge with blockchain based governance at their core.

      1. Do a little reading and you’ll see that this is a giant step backwards! In a republic, a constitution or charter of rights protects certain inalienable rights of the minority that cannot be taken away by the majority of voters.

2. Joel says time and again that governance is the key value driver of tokens going forward.Passes the smell test easily. Once you remove data, code and to some extent network from the value stack, there’s not much left to hang your hat on.Many are bullish zrx primarily because the more coinbase integrates it the more they will need to hold just to have a voice over its future direction.Olaf did a good podcast recently how governance design can be mighty dangerous as it could end up sending the protocol down a dead-end with no method of retreat. All in all, exciting stuff.

   1. We are definitely in the 1.0 era of decentralized governance, currently making the mistakes and iterations needed to get us beyond that in the future.

      1. 0.1

         1. possible.

            1. Have you looked at the ICANN model? Seems to me we could take some of the lessons learned from the experience of managing decentralized addresses and more; incorporate of what has worked there into a needed governance model here. In any case, a governenace strucure is needed, sooner better than later

            2. Nope definitely not ICANN. ICANN is (like) a bloated local government that finds ways to spend money and keep people busy with nonsense. Holds very nice physical meetings in exotic locations though. Couldn’t even get their act together (despite having enough labor to run Walmart) with GDPR. ICANN doesn’t even ‘manage’ much anyway. The vast majority of domains that matter are .com and those are tied up by private companies or people and have been for decades. (Early purchase of tokens … kind of similar actually, and those owners have no say in ICANN typically and don’t have to answer to ICANN either (and will never have to)).

            3. not current version but the initial design. Seems like the design on the table vests control by majority of coin holders, or ethereum design, in which each platform does its own thing. That would lead to no “governance” all, since there would be no interactive platform coordination or “rules”. How can average user feel “safe” in terms of blockchain validity – platforms being used to transfer information/ assets, if there is no recourse except “blowing the platform up” in the sense of disengaging users in some fashion so that they are not harmed, or some process by which they could arbitrate their position.

            4. governance in the real world has taken thousands of years to reach its present state of imperfection. crypto governance will be in a state of flux for some time.

         2. Hahaha!

            1. 🙂

3. Decentralized governance is an area I’ve been thinking about a lot. Not only will it apply in the technical realm like in the examples you mentioned, but we will need to see it emerge beyond just tech. Incidentally, yesterday I tweeted this thought, although a bit early and daring, nonetheless possible in the future:https://twitter.com/wmougay…

4. Talking about Spam account and blockchain, Twitter should partner with Metacert protocol. This effort can only be crowdsourced and incentivized through crypto networks. can’t be a centralized one.

5. Speaking of Twitter account suspensions, I was recently impersonated via 2 fake Twitter accounts, and I followed the Twitter process for reporting them. In both cases, Twitter suspended and deleted both of these accounts within 48 hours. So it was very efficient.

   1. One of those handles is @yourlastname which was suspended. That is good you should be able to get that handle in a bit possibly.

      1. right.i’m not sure why Twitter discontinued their Verified account process.

         1. frictionless growth. exporting policing to users. MONEY.

6. Communities have governed software systems for several decades in the open source world. Not always effectively, but with some massive success stories like Linux. The difference with the cryptocurrency version of decentralized governance is that it concretizes the expression of views in a token, which typically has an economic value. That opens up a new possibility space, but there’s also a huge danger. Another of the great lessons of open source (and the missionary zeal of cryptocurrency enthusiasts) is that sometimes money isn’t the best motivator.

   1. that’s a pretty good statement Kevin. shows how much further we need to go and understand in this area.

   2. We see just how dangerous and polarizing decentralized democracies can be.Most of the decentralized applications being hyped, from governance, proof of work, contracts seem to come up short when one stacks it all up versus, great teams, existing database technologies and payment architectures (but for the get rich schemes on OTM of course).

   3. >Another of the great lessons of open source (and the missionary zeal of cryptocurrency enthusiasts) is that sometimes money isn’t the best motivator.Agreed. From what I’ve seen it seems to motivate the wrong individuals and can cause more problems for teams to solve. Teams now have to navigate around those individuals in order to communicate with their colleagues. However, I suspect that teams will learn from each other and navigate around these individuals.

   4. Decentralized Governance ≠ Values Based Governance ≠ Democracy based Governance.A truly democratic system will not weight votes disproportionately based on money. A value based system will not let the most powerful actors determine policy.This stuff is more complicated than meets the eye. We will need to let some of the early experiments play out before we can judge what is good vs. bad, who should determine that, and how to protect against human nature to corrupt and dominate.

      1. I’ll add two things. As much as people say Linux is decentralized Linus Torvalds held a very tight hand on it and made a ton of money.Two other truths in software.One of the biggest things you do in managing software are two things that are not democratic and not managed by money.This is as old as softwareIf everybody just gets to develop what they want the tough, shitty, boring, features, that are critical never get done. Example: print drivers. You manage to rotate people from doing the mundane to exciting.If you just manage requests by who pays the most money your software will suck. Example: giant enterprise systems.

         1. As much as people say Linux is decentralized Linus Torvalds held a very tight hand on it and made a ton of money.Exactly. Also in any project like that the established people, that is the people around the longest, hold onto much more defacto power (and maybe respect but should that lead to power?).This is as old as softwareAs well as anytime you get a group of people together of varying amounts of participation, knowledge, drive etc. [1]I think this is at least one of the reasons (back to software) that new kids want something new. That way they can get that power that they don’t have with the old things where mr crusty controls everything. Or, um, ms or mrs crusty.If everybody just gets to develop what they want the tough, shitty, boring, features, that are critical never get done. Example: print drivers.Exactly. Girls and programmers just want to have fun. (And/or wash off the suds.)[1] An example is a community association or condo board. I hold way more sway where I am on the board than I should. Everyone should be equal? But I am more equal than others. In a new place where I am not on the board I noted the other day there are not one but two plaques dedicated to the work done by the board members in restoring the building after Superstorm Sandy. I think that is so funny. The plaque was obviously authorized by the board to pay respect to the board. No way any non board member would ever wake up in the morning and come up with that idea or think of it. Possible but highly unlikely (don’t look for the zebra there). Lot’s of down side to getting older but one of the upsides is that you can spot that type of thing knowing why it happened.

   5. yes. lots to learn from open source communities. but also lots to improve on.

7. the tyranny of tokens (and their significant holders).”If you hold a significant amount of 0X tokens, you can vote against that change.”

8. Digital natives using trust primitives. Feels like back to the future for tribalism and especially with not one man/woman one vote but one token one vote

   1. “one token one vote”that distribution only seems plausible if it is in some way advantageous to hold only one token, which seems to contradict the market incentive for holding tokens.what utility model would make it advantageous to hold only one token? next stop is zero.

      1. He means that most if not all blockchain governance implementations on the work are using tokens as vote weight. So 1 token = 1 vote, 1M tokens = 1M votes. This is different from a democracy where each person gets just one vote, no matter their wealth. (Leaving aside vote buying and activities like that)

9. your comment is 100% correct, but it feels more like the land or slave owning times of the past… a techno-feudalism if you will… but tokens instead of land or other assets.

   1. which is why it’s called ‘governance’.crypto is already beginning to look like peasantry 2.0.

      1. Agreed. I guess I wasn’t disagreeing with the definition that it was governance just that it was BT the best model for it

      2. It really is. There is very little to look forward to from what I can tell.

10. Meeco’s governance has been designed so that the people can hold the master nodes accountable for their governance decisions.The master nodes keep the people safe by voting to approve service provider integrations so that people can’t be tricked into consenting to give their identity data to scammers. The people can economically penalise bad actors who are not acting in the networks interest.For example after a credit unions proposal has been discussed in the public forum, if the banks where to collude to vote down a credit union’s integration, the people can see how each master node voted and down vote the banks behaviour (say burning $5 to penalise the banks $50)If there is sufficient outrage at the banks behaviour then the banks stake will be slashed sufficiently that they no longer meet the staking requirement and are removed from the network. This would require the bank to reapply to join the network.

11. Fred great post. While I agree governance the key issue for many new crypto businesses – I remain skeptical that a community governed organization can react and iterate anywhere close to the speed of a centrally owned organization. Why the vast majority of “winners” out there are corporations vs. mutuals or cooperatives. I think crypto will change that math – and a lot more decentralized can “win,” but will still be the minority. FB won not just because of inherent network effects, but because of Zuck’s brilliance – the news feed never launches if it is a “community” decision. Maybe Twitter is different. But the last 10 years have been about speed to learn, speed to iterate ,speed to A/B test. I think community governance is a significant counter to those attributes.

12. Many crypto projects have either implemented a form of decentralized governance or have committed to doing so in their white papers….and…If you hold a significant amount of _____ tokens, you can vote against that change.This sounds like a great ‘scheme/incentive’ to get people to buy in early at a low cost per token thereby gaining control.

13. of a community governing a software systemSmall detail but Is it really a community governing if the early adopters (or gamblers) who bought the tokens (per my other comment) are more equal than others?Also if a small percentage of people have the votes (because they own a large share) then it is much easier to have a cabal of like minded early or large adopters band together and agree to some change. Is that really any better than a company doing the same thing?

14. EXCEPT … human values get reduced+converted into machine readable format, aka functions and variables and {0 or 1, %} — with a game theoretic framework in the case of crypto.And we’ve made the discovery in AI that game theoretic frameworks DO NOT MAP TO human values and human language.Therein is the common stumbling block/Achilles’ heel for both AI and blockchain.

15. .Governance = control. Crypto, by its own admission, abhors control preferring to rely upon abstract, independent verification.Control comes from bad events or from the anticipation of bad events or from the desire to avoid regulation. When bad events occur, the regulators kick into high gear. There have been some bad events, but there is a tsunami on the horizon.The bad events in crypto are still in their infancy. Does it seem unlikely that a similar success rate as VC, in general, will not occur?Control issues have given us different classes of tech stock, so there is a push afoot to retain founder control. Recent IPOs demonstrate this conclusively.The regulators (IRS, SEC, DOJ) have already begun to take note of crypto and have begun to stake out their initial positions which are quite traditional and conventional.There is a natural conflict between community v ownership.If you own the biggest house in the neighborhood HOA, you still get one vote. That is community made all the broader by the idea of “stakeholdership.”If you own 25% of the underlying security (token), you want a large presence at the table. If you and others own 51%, you want absolute control subject only to some democratic niceties.The conflict of community v ownership is real.Control will simmer until the pot boils over from losses. Most of the preceding notions are in conflict.When the failures begin to roll in, the issue of control will enlighten the issue of governance.Nobody really knows their values until they see the price tag.JLMwww.themusingsofthebigredca…

    1. To me, bad governance is wasteful, dangerous, etc.Good governance is challenging and over time something like a Darwinian struggle with lots of failures for whatever reasons — deadly sins, etc. — and out of the failures occasionally survival of the fittest.One would guess that failures were mostly from big exogenous effects — natural disasters, violence, disease, economic disasters, incompetence, technological changes, etc. But, after paying “full tuition” (@JLM) too often, I have had to conclude that far too many disasters are from some strong, inexplicable human propensity, even compulsion, like lemmings running off a cliff or whales swimming to a beach, to extract miserable defeat from the jaws of magnificent victory. So, failure is more common and less understandable than I would ever have guessed. There’s a lot of failure out there, and Darwin is a very busy guy.Sure, in a democracy we have a version of distributed control and maybe some governance. But the goal of democracy is relatively simple — fight at the ballot box instead of in the streets. So, democracy can avoid a lot of blood in the streets but beyond that is a bit clumsy on the road to good governance.To me, the idea of distributed governance winning Darwin’s survival of the fittest is laughable if it were not so sad from being so incompetent.In business good governance is from a good CEO or a good C-Suite. Sometimes a BoD can step in and change governance and, then, maybe get lucky and get good governance. Generally governance by committee is a Darwinian loser. And distributed governance is, as I said, laughable.It appears that the blockchain community sees that their technology is distributed and, then, is looking for reasons to say that “distributed is good”. Uh, let me take a moment and text message Charlie Darwin and get his Y|N on that …

       1. .Agree more with you …..JLMwww.themusingsofthebigredca…

16. Let me simplify what Fred seems to be trying to say.We need governments to make good laws and properly enforce them.Within the law, “consumer sovereignty” reigns.In the USA, because generally that which is not forbidden is permitted, then naturally during the “Wild Wild West Days” companies often “game the system” (see Charlie Munger’s thoughts on this point by searching on Google) thereby acting unfairly. As a result governments enact new laws or or reinterpret existing laws to even out the playing field.

    1. IIRC the real quote is about programming languages in the US, Germany, France, and Russia:US: Everything is permitted unless it is forbidden.Germany: Everything is forbidden unless it is permitted.France: Everything is permitted even if it is forbidden.Russia: Everything is forbidden even if it is permitted.Ah, middle school level computer science!Also a bit out of date!

       1. Judaism: The rabbis make the laws. Some things are permitted; some are forbidden.Most questions can be answered by consulting the Shulchan Aruch but when an observant Jew has a question about whether something is forbidden or permitted he can ask his local rabbi.Tough questions, that stump a local rabbi, get “kicked upstairs” until a “big enough rabbi” (great enough rabbi) makes a decision. That decision is the law. Great rabbis have the authority for making laws because Moses received that authority from G-d. That authority has been passed it down from generation. It will be passed down forever.By the way, observant Jewish women usually ask questions they have to the rabbi’s wife who, of course, asks her husband.Although observant Jewish women rarely study much Jewish law and are legally obliged to obey their husbands lawful commands, in fact a Jewish wife is essentially in charge of her husband and children. Observant Jewish husbands who regularly disobey their wives typically end up in very serious trouble. In extreme cases they are kicked out of their communities and barred from seeing their children. In fact, most observant Jewish husbands fear their wives yet observant Jewish wives rarely fear their husbands.For observant Jews, rabbis make the laws and observant Jewish wives and mothers ensure they are carried out. In practice, observant Jewish men are carefully supervised by their rabbis and wives.Rabbis and observant Jewish wives simply don’t trust observant Jewish men to “do the right thing” without constant supervision. Observant Jewish wives, by contrast, are rarely supervised much. They are required to observe Jewish law (halacha) but in practice they tend to “do the right thing” without much supervision. Men are men. Without constant supervision they typically go from bad to worse.

          1. “… in practice they tend to “do the right thing” without much supervision.”I’m not Jewish, but that’s close to some of what I was told about girls and women and also one of the lessons I had to learn the hard way — “pay full tuition”. The lesson I had to learn was that, for too many of the essentially middle class Christian, sometimes supposedly quite devoted Christian, girls and women I knew or knew of, what I had been told was wildly wrong. Eventually an expert just let me have a simple answer — “there are a LOT of affairs”.More generally, from what I’ve seen, when there was what at least appeared to be a strong family, essentially always it was the man who wanted, thought of, planned, designed, led, managed, controlled, and made the situation work. And far too often I saw a man working to build a good family, but his wife was the problem: To her the marriage vows were just a dress up comedy skit. The marriage was a bitter manipulation of the foolish, gullible man. She was in the marriage only as a short term matter of convenience. For being a wife and mother in a home, she bitterly regarded that as “giving up the best years of her life and her career to do low grade, menial scut work to raise HIS children”. She was jealous of his career success and the power it gave him and tried to sabotage them. Her real interests were outside of the marriage, and she fully hoped and intended to leave the marriage and her husband and pursue her interests ASAP. And while in the marriage, faithfulness, fidelity, love, commitment, candid communications, honesty, honor, affection, respect, responsiveness, planning, cooperation, bonding, etc. were all nonsense, and affairs were to be pursued eagerly even if surreptitiously. She was, with high pride, especially eager to cheat on her husband from 24 hours before the wedding to 24 hours after it. Basically she would do the wrong things unless her husband was good enough as a leader to get her on track and essentially daily keep her there.I’ve seen astoundingly determined, cynical even hostile extraction of miserable defeat from the jaws of magnificent victory. E.g., he was on a family yacht trip in Lake Huron. At the dock he met a girl 16, cuter than kittens and puppies. He had her join him and his family at the restaurant on the island, Mackinac. They had a total love birds, sweet heart romance. When she graduated from high school, they got married in a big ceremony on the island, complete with horse drawn carriage, lots of red carpet, her in a gorgeous gown, etc. And that was the peak — all the rest was downhill. Soon she was gone, and he cried in his pillow for a year. To her, the marriage and a dime were not worth even a 10 cent cup of coffee.For any man who wants sexual relations outside of a strong marriage, even quick consideration of the facts of life on medicine and the laws on divorce, division of property, alimony, child support, etc. will severely slow his eagerness.More broadly, marriage, love, home and family are in deep trouble: Way too commonly, love making doesn’t mean anything, in particular, doesn’t mean love. It is way too common for her to want to have sexual intercourse (SI) before holding hands, hugging, kissing or meeting his family and where during SI she doesn’t even look at him; in such a case, SI doesn’t mean anything more than a game of ping pong. IIRC 40% of children are born to single women. One third of marriages end in divorce. The birth rate is so low we are actually going extinct.I’m sure Darwin is on the case and very busy and will be coming out with some big changes.

17. Fred, it would be great if you did a post on market manipulation within the crypto sector. How were a few players able to drive up the price of BTC from $150 to $1000? How do you control for bad actors in early and young blockchains when everyone is anonymous? It is not something that I know a lot about, but I’m sure is something you must have studied given your investments.

18. No doubt better Governance is the end goal for blockchain and crypto. Its the Holy grail. Will it ever be achieved? The biggest limiting factor is the human species. We have always been the problem with democratic systems. Solving for lack of participation in the system has always been a problem.

19. Code by Lessig has some great thoughts on this topic…from 20 years ago.That guy is a real genius and I’d highly recommend the book.

20. Not to be overly promotional here, but the idea of shifting from functionality to values (and then differentiating those values in the minds of the marketplace) is precisely what motivated the creation of the book, The Decentralized Marketing Organization. The book features 15 of the top crypto projects like Stellar, Augur, Blockstack, Steem, Storj, Zcash, and others expounding on the topic.In a world where liquidity is high and switching costs low, it becomes most important to explain WHY a project needs to exist and how it will make the world better. This is straight up Simon Sinek stuff.While many crypto/blockchain projects have recognized that Marketing (the strategic/value prop/brand side) is important, there are many who think that “marketing” is really about emails, banners, and tweets.Kyle Samani had a great section in a recent blog post called “Good Artists Copy. Great Artists Steal”:“The logical conclusion is that the key to long-term, sustained success is go-to-market strategy and execution, and that technology and product are almost irrelevant.For almost all crypto teams, this should be a scary thought.I suspect if you asked every crypto team “Which function is strongest in your organization, technology and product, or go-to-market?” less than 1% would say go-to-market.”I think he is right. The Decentralized Marketing Organization book (http://bit.ly/cryptoDMO) explores this and then, next up are the Crypto-Native Marketing Tools like Endor*, Frst, Bloxy, Amberdata, KickCity, Pixel, Coinmetrics, and TokenData are all here.15 years ago, a company like Sprinklr did not even need to exist. Today, it is a nearly $2bn enterprise software company.I think the same thing is going to happen in crypto and much of it will be driven by exactly what Brad said, the move from functionality to values.