The Blockchain: An Infrastructure for the Commons
Guest Post by Timothée Gosselin - September 10, 2016
Blockchain this, blockchain that... If you are a bit curious about new technologies, you probably heard of the Blockchain. You have heard about many things. Some good, some bad. Big hopes, big disappointments. And for sure from one source to another, its never the same discourse. After months of exploration, I really got into the nerdy world of the Blockchain last February during the Lift Conference in Geneva and the CellCamp in the laboratory Hackuarium. It is at that time that I made the first draft of this article. Things have moved at a very fast pace since then. Let me walk you through those past months to better understand what is really going on.
The Blockchain, a brief explanation
To make it simple, let's just say that the Blockchain is a distributed database. It is an accounting technology that, by design, enables the economy of third-party certifiers. Today, when you make a financial transaction, you deal with your Bank. When you get an official diploma, you deal with your school and your state. When you sign a contract, you deal with lawyers and notaries. All those entities are central authorities, they are third-party certifiers, they guarantee trust in transactions. The Blockchain because of its embedded protocol makes them obsolete. For instance, Bitcoin, the first proof-of-concept and use case of the Blockchain, has proved that financial transactions can be made without absolute authority, being in that case Banks.
Don't get it wrong, the Blockchain is not only about crypto-currencies. One of its mutations, Ethereum, brings the protocol far beyond what we experienced with Bitcoin. Ethereum aims at providing a world computer. A completely distributed computer that finds its computing power in all our machines. The true disruption here is about what we call "Smart Contracts". A smart contract is a piece of code stored on the blockchain, a self-executing program, that executes itself when certain conditions have been met and, when it does, becomes irreversible. You can not ever go back. It is kind of a bot that bounds entities without the need of a third-party certifier that would provide trust.
Even if you still don't get it all, I guess that now it does not come as a surprise that the Blockchain brings a change of paradigm. To go further, I would recommend this White Paper published last year by Cellabz: Blockchain & Beyond.
From the Blockchain to the DAO
Recently a small team of coders coming from Ethereum made quite a buzz. Slock.it wants to bring the blockchain to the Internet of Things with the aim of setting up the "future of infrastructure of the Sharing Economy" through fully automated objects. Imagine a door lock with which you can directly interact, sign your renting contract and pay without the need of a middleman. Imagine AirBnB without AirBnB. Imagine Uber without Uber.
They pushed the concept further. Instead of going through traditional paths to raise money, they built the DAO - Decentralized Autonomous Organization - which is an Ethereum contract that could be described as a common pot, a company pot not an investment fund, to finance disruptive projects such as Slock.it. This is the first experience of a cyber company. Buying some DAO tokens you get equity and voting power. You can either make proposals and vote on others' proposals such as the one made by Slock.it. This is a radical new kind of governance and equity system that leads to quite an interesting story. Indeed, the DAO is the biggest crowdfunding experience in history with in June 2016 up to $12M ETH inside the DAO’s smart contract - worth roughly USD 150m at the time - raised through the contribution of 10,000 people that decided to put their money in a common pot ruled by a decentralized autonomous organization, that is to say pieces of code, with the goal of making profits.
But wait a minute. When disruption might be too disruptive!
Let's not be too naive. There are indeed many flaws. While listening to the talks at the Lift Conference, I had quite a disturbing feeling. As if I was sitting years ago with the founders of the Internet, with a tiny number of people that could really understand and build what would become the revolution of the century. Unfortunately, only those guys understood what was going on. "People just need things that work, they don't need to understand it", that's usually what you hear in those places. And that's how we got it here. That's how we enabled the web to be kind of centralized...
Moreover, the Blockchain enables new governance systems ruled in the cyberspace where "Code is Law". What does it mean? Do we really want our society to be driven by pieces of code understood and built only by the nerdiest of us? What happens when there is a bug?
That's exactly what we are facing with The DAO. There was a bug and now millions of dollars are stuck. An attacker found a flaw in the DAO smart contract and used it to drain $50 millions from the DAO into what is called a child DAO. To be precise, we cannot say that the money has been stolen neither lost. For now it is stuck, none can access it, not even the attacker(s). Funny thing, the system is so good that indeed when something is coded you cannot change it. When the contract executes itself you cannot go back. You cannot get that money back without breaking the rules. That's not all. While it seems to be a fraudulent act, the hacker(s) who lead the attack might actually be in their rights. In a DAO, everything is ruled by a smart contract. If this contract allows me to do it, I'm therefore in my rights. It is quite an interesting situation that completely questions our whole legal system in the context of cyber-space and decentralized technologies. This situation led to quite an active and democratic debate, proving that technology alone might not be the only solution. Indeed after weeks of intense discussions, mostly based on idealogical divergences, a consensus was found to implement the necessitated fix to recover the funds which led to the creation of a new branch of the Ethereum blockchain.
Bad things happened, even worse thing can happen but we should not kill the Blockchain yet neither Ethereum nor the DAO as a concept. Those experiences just set the first stones of governance systems that enable to build new kinds of trust. What we need to remind ourselves, is what Cedric Price once stated.
We need design for inclusion
Let's take a little break and recap a bit the situation.
On one side, we have an infrastructure and models that rule our organizations which are completely outdated, centuries old, and disconnected from the digital world. For instance, the price of an invoice today - writing, printing, sending... - is $13. Billions are sent every year in the B2B market. On the other side technological solutions are offered to deal with those issues. Technologies that very few know of and even less actually understand.
The right question and the most radical innovation is about inclusion. It is about building an infrastructure adapted to our modern world that is intelligible by all. As stated by Cellabz, we should not think that innovation in the Blockchain world will come from those who master the technology. It will be led by people coming with a fresh view, with diverse and complementary skills. Cellabz believes that it is in places where new way of working and living are experimented that you will find the best environment to use and experiment Blockchain technologies. Places where models of organization and governance are remixed, hacked and pushed to their boundaries. In french we call those, "Tiers-Lieux". Let it be a FabLab, an HackerSpace, a community space... Those are places where an economy of the commons is being experimented.
Let's now imagine, that coding a smart contract becomes as easy as assembling legos together. Crazy? Not that much. That's what the MIT Media Lab with Scratch is proposing. Imagine kids playing around and coding their own organizations, experimenting different governance systems, designing their own democracy.
Dream? Nightmare? That is up to you but that is what is coming. I'm not an advocate of a technocratic discourse neither of the Blockchain. Nevertheless I am convinced that in a world becoming more and more complex, our society cannot sustain with the models that are set today. Technologies such as Blockchain are an opportunity to support a change of paradigm. Those are emergent technologies. We cannot fight it but as a citizen we need to understand it and make it understandable. We need to hack it, improve it and share it. It is about empowering anyone to contribute to the commons and build the world they dream of.
Before closing this article, let's go through one more example to illustrate what I have been talking about.
DAISEE - Energy as a common
DAISEE was first thought during the CellCamp with a question in mind: How could we build an inclusive and resilient system for energy? The idea behind DAISEE is quite simple and based on a core statement: Energy is a common.
Today, at least in France, the production and distribution systems for energy are based on a post-war infrastructure and are completely centralized. Everything goes through central points of productions and distributions which do not even cover the whole country in an efficient way. Areas at the edge of the country such as Brittany suffer from energetic stresses while paradoxically having the most promising sources of renewable energy.
DAISEE aims at building the InternetS of Energy by enabling peer-to-peer exchanges of energy through a decentralized and distributed infrastructure. Picture a household as a wallet filled with your consumption and production data that constitute your actual balance of energy tokens based on Watt/hours. Add on top of it a smart contract that automatize exchanges when, for instance, your balance is negative - meaning that you are consuming more than you are producing. And here you go, you have an autonomous market place for peer-to-peer energy trading that is owned by none, ruled by all.
You can even think bigger with a DAO-like company to invest in local systems of production for a resilient infrastructure and towards self-sufficiency. DAISEE offers to individuals, local governments and any kind of organization - will it be a a decentralized or centralized structure - to become pro-active in their energy transition.