Blockchain Revolution (updated)

by Don Tapscott

  In July 2014, during one of the most contested presidential elections in Indonesian history, an anonymous group of seven hundred hackers created an organization called Kawal Pemilu, or “Protect the Vote.” Its mission was to publicly tally election ballots online to let voters verify results at each polling station. The principles of decentralization, transparency, and individual anonymity combined to ward off malicious cyberattacks and ensure a fairer election.43

  “Do corrupt governments want to keep themselves honest?”44 asked Anson Zeall, CEO of CoinPip, a company specializing in sending fiat currencies across international boundaries using the blockchain. He questions whether everyone embraces advances in voting, and whether politicians actually want fair elections. To others, e-voting seems like an unnecessary or hasty leap forward. We argue that many of these issues belong to the realm of implementation, not design.

  The redesign of our electoral and political systems will likely influence more fundamental issues with voting in democratic elections. Compare voter ID fraud with other more insidious factors. A comprehensive investigation of voter ID fraud in the United States in 2014 found thirty-one incidents, including prosecutions and credible allegations, in federal, state, and municipal elections—since 2000.45 In that time, more than one billion ballots were cast in general and primary elections alone.

  In the four states with the harshest ID laws, more than three thousand votes were positively rejected for lack of proper ID.46 This doesn’t include those who didn’t bother to try at all—and that is a much bigger problem. While their model of democracy is heralded around the world, most Americans don’t vote in elections, citing reasons like “nothing ever gets done,” “politics is so corrupt,” and “there is no difference between the choices.”47 We expect blockchain technology to have some innovative approaches to these problems, too.

  With time and development, blockchain technology might be the impetus that allows e-voting to transform democratic elections and institutions by effectively and reliably bringing them into voters’ hands.

  ALTERNATIVE MODELS OF POLITICS AND JUSTICE

  If the blockchain could enable a more efficient, responsive government and improve how democracy is administered through new voting procedures, could it also catalyze new political processes as well?

  For some supporters of next-generation government, the ultimate aim of electoral reform is to enable a system of “liquid democracy.” Eduardo Robles Elvira, CTO of Agora Voting, is one such fan. He describes liquid democracy as combining the best parts of direct democracy (like the sort practiced in ancient Athens) with today’s representative democracies, which ask very little of their electorates.

  Liquid democracy, also called delegative democracy, allows citizens the ultimate in customization and personalization of the democratic experience. In Robles Elvira’s words, in a liquid democracy “you can choose your level of participation at any point in time.”48 Your input is always welcome, but not required to keep the country running.

  Voters can delegate voting authority to multiple representatives delineated across an array of topics.49 Referenda are then held frequently and categorized by topic, indicating which proxy (if any) should be prompted to cast their vote on the issue. This enables a system in which voters can select many trusted experts or advisers to vote on their behalf. Underlying this ideology is the belief that no one person (or party) has the full, right answer to every question. In representative democracies this axiom is often both assumed and ignored.

  Robles Elvira is working with governments to build “a highly distributed, unique log of events really good at solving distributed denial-of-service (DDOS) attacks.” Blockchain technology enables this. He said, “It is very difficult to create a secure, distributed system and the blockchain allows us to do this . . . and it’s not just that it’s distributed, but that it’s distributed in a secure way. This is really important and can be useful for a lot of applications; e-voting is just one of them.” His company, Agora Voting, provides the technological infrastructure needed to conduct auditable, transparent, and verifiable e-elections. “With top-notch cryptographic technology, humans become the weakest link in the security chain.”50

  Spain’s antiausterity party Podemos (translated to “We Can”) uses Agora Voting to hold its primary elections. With the party’s commitment to participatory democracy came a commitment to transparency, an ideological shift in Spain and elsewhere consistent with the one underpinning distributed technologies.

  Robles Elvira sees some limitations, too. To maximize security and anonymity, a user currently needs access to the whole blockchain, a behemoth of a file. Size makes it difficult to access (especially on a mobile) and decidedly user-unfriendly. Still, the technology is always evolving and designs are ever improving. “We are at the beginning of e-voting,” said Robles Elvira.51 The technology is pliable. Undoubtedly, its best applications are yet to come.

  Dispute Resolution

  Some legal disputes are best left out of the courts. We’ve seen how smart contracts can enable decentralized, independent, autonomous adjudication of commercial disputes. Smart contracts are indifferent to notions of fairness or justice, however, and unable to reconcile conflicting versions of facts. Even more revolutionary for adjudication than a verifiable record of evidence, the blockchain can be the platform for P2P dispute resolution. In this model, a jury of hundreds or thousands of your peers could weigh in to effectively, as Pamela Morgan of Empowered Law said, “crowdsource justice.”52

  Random-Sample Elections

  Another democratic model enabled by blockchain-style governance is random-sample elections. Voters selected at random would receive a ballot in the mail and directions to Web sites with candidate information and statements from interested parties. Anyone may request a ballot, but it will not be counted, and will appear indistinguishable to its valid counterparts to all but the requesting voter. These can be sold to a vote buyer, but they would never know if that vote counted. As these votes are believed more likely to be sold than their countable counterparts, it makes coercion impractically costly. David Chaum, inventor of the concept, said random-sample polling could produce more representative and reliable results than elections today regularly achieve.53

  Prediction Markets

  The company Augur is using the blockchain to aggregate many small wagers about future events into powerful predictive models. With the right application, it could help create collaborative democracy. Governments could use prediction markets to engage citizens in helping better understand future scenarios, enabling governments to make better policy choices.

  Ethereum’s Vitalik Buterin discusses an alternative model of political life called futarchy.54 Conceived by economist Robin Hanson, its tenets can be neatly summarized as “vote for values, but bet on beliefs.” Citizens elect their democratic representatives in a two-stage process: First, pick some metric to determine their country’s success (like literacy or unemployment rate). Then, use prediction markets to select government policies designed to optimize the elected metric.

  Augur’s style of prediction making could engage citizens in making small choices that contribute to national discussions of policy, eventually shaping the future of their own democracy.

  Blockchain Judiciary

  The blockchain can also transform our judiciary. Combining the concepts of transparency, crowdsourcing, and online citizen participation—over a blockchain—we can envision reintroducing concepts of ancient Athenian democracy into the twenty-first century.55 CrowdJury56 looks to transform the justice system by putting several judicial processes online, using both crowdsourcing and the blockchain, including filing a charge or complaint, gathering and vetting of evidence, engaging citizens in open trials online and as online jurors, and issuing a verdict. Think transparent processes with crowdsourced discovery, crowdsourced analysis, and crowdsourced decision making and presto—you get an accurate outcome in a much shorter time frame and at vastly reduced cost.

/>   The process57 starts with the reporting online of a suspected civil or criminal wrongdoing (e.g., a public official suspected of receiving bribes) and inviting potential witnesses to provide evidence, and combining information from multiple sources. The original complaint or claim, as well as all the evidence, would be cryptographically stored via the blockchain to ensure that it remains on record and is not tampered with.

  Once it is filed, relatively small (nine to twelve people) groups of volunteers self-selected based on required expertise would analyze the facts and determine whether there is validity to go to trial. At trial, there would be two possible paths. First, the named “wrongdoer” pleads guilty and proposes restoration (which may or may not be accepted by a jury) or the complaint proceeds to online trial with a massive jury. Just as in Athens, where any citizen over thirty could apply for jury for any given period (but not for a specific case), individuals will apply for juries with final selection by a randomization device, just as Athenian jurors were selected by a kleroterion in the fourth century BC.58 As a result, there is no bias in the distribution of jurors to specific cases. The trial and all the evidence are broadcast online in an open-court-like model. Anyone can “attend” and ask questions of the defendant, but only jurors vote for the verdict via an online vote.

  Let’s start with conflict adjudication in low-value disputes and resolving issues in global communities across jurisdictional lines, for example social networks. The U.K. Civil Justice Council recently looked at online models worldwide to recommend online dispute resolution.59 Most of the early models depend upon use of judges or other expert adjudicators at some stages in the online process. Other processes in place rely upon other online participants to call out and address inappropriate behavior online such as defamatory feedback (e.g., eBay’s subsidiary in the Netherlands Marktplaats’ Independent Feedback Review) or cheating at online games (e.g., like Valve’s Overwatch, which allows qualified members of the community to review reports of disruptive behavior and apply temporary bans, if appropriate.)60

  This is a far cry from mob justice. It’s the “wisdom of the crowd” applied to many more judicial processes with beneficial results.

  ENGAGING CITIZENS TO SOLVE BIG PROBLEMS

  Most people who believe in science understand that human carbon emissions are warming the atmosphere. This climate change is dangerous to ours and many other life-forms on the planet. Governments, companies, and NGOs working on reducing carbon tend to agree that so-called carbon trading is an environmentally effective and economically sensible approach to lowering emissions.

  One policy is called “cap and trade.” A regulatory body sets a “cap” or limit on carbon emissions and lowers it over time to reduce the amount of pollutants released into the atmosphere. The “trade” represents a market for carbon allowances, helping companies and other organizations to comply with their allocated limit. According to the Environmental Defense Fund, “The less they emit, the less they pay, so it is in their economic incentive to pollute less.”61

  Today the European Union’s most developed nations have cap-and-trade exchanges. California, Ontario, and Quebec agreed on the Montreal Protocol, advocating for a global exchange. Officials at nation, state, city, and enterprise levels could allocate cap-and-trade credits to balance set allowances. At the same time, blockchain-based reputation systems could rate the kilowatt-hours of energy providers to the grid according to standards of sustainable greenhouse gas reduction. For example, the system could tag energy sourced from coal with higher cap debits and renewables like solar as credits. Blockchain can help automate the cap-and-trade system on an industrial scale. Efficient pricing algorithms compute credits and debits in real time, and green organizations capture and track their carbon credits on the ledger and roll them into an exchange.

  What if we created a cap-and-trade system for people? Surely we need more than our institutions to change their behavior! Personal carbon trading would work through the Internet of Things. Sensors, detectors, and instrumentation would measure your water heater, dishwasher, and household thermostat in real time and inform you of your carbon credits balance. At the same time, you could earn credits by acting in practical, sustainable ways. If you added an array of solar panels to your roof, you would earn credits by returning excess energy to the grid.

  Could this create new sources of annual income for people? After all, the poor and homeless are low carbon users. By biking to work, you could save credits that your hot water heater could spend: “Hey, dishwasher—my personal cap-and-trade watch indicates we can afford to run on full wash and thirty-minute dry cycle.” Water sensors in the washer could manage water usage based on an acceptable level of particulate density, dampness sensors in the dryer could turn the dryer off when the clothes have reached an acceptable level of dryness, and the building’s HVAC system could harness the excess heat.

  WIELDING TOOLS OF TWENTY-FIRST-CENTURY DEMOCRACY

  As a global, distributed, and programmable ledger that is secure, designed for privacy, and enriched with incentive systems, blockchain technology lends itself to the development of new democratic tools such as:

  Digital Brainstorming: Bringing together policy officials and citizens to have real-time, moderated, online brainstorming sessions to identify new policy issues or needs. Consensus is then achieved through one-token, one-vote systems that can help achieve thoughtful discussion and make it harder for disrupters, trolls, and saboteurs to cause damage.

  Challenges: Online contests with a panel of judges. Think of preblockchain models like the Goldcorp Challenge (mentioned earlier), the X Prize, or the numerous innovation challenges conducted by many Western governments. The goal of challenges is to engage citizens in innovation and the creation of public value.

  Online Citizen Juries and Panels: Citizens chosen at random serve as policy jurors or advisers on a topic. The jury uses the Internet to share information, ask questions, discuss issues, and hear evidence. Blockchain reputation systems help questioners to know the background and reputation of the jury and panel members. Decisions and records are recorded on the blockchain.

  Deliberative Polling: This gives citizens the resources to learn about and reflect upon the issues in a collaborative and deliberative fashion. This would combine small group discussions on the Internet with scientific, random sampling to contribute more informed public input in policy making than instant polling can provide.

  Scenario Planning: Building scenarios with simulation and modeling software to project future policy needs and to understand the long-term consequences of decisions. Politicians, bureaucrats, and citizens could assess the potential impacts on a range of factors, ranging from health, to the environment, to the economy.

  Prediction Markets: As we explained in the case of Augur, there are countless opportunities to use prediction markets for trading the outcome of events. Governments can use them to gain insight into many substantive questions: When will the bridge actually be built? What will be the unemployment level in twelve months? Will there be a National Party prime minister after the next election—an actual question from an iPredict market in New Zealand.

  Blockchain technologies could supercharge all of these tools. To begin, contributions from citizens could be private, opening up the possibilities of engagement. This is bad for repressive governments but good for democracy as it makes it more difficult for government authorities to censor, suppress, and track down opposition. At the same time, as described earlier in the case of Blockapedia, blockchain-based reputation systems could enhance the quality of discussions, reduce the number of trolls and saboteurs, and ensure that all comments are accurately and indelibly recorded. When there is compensation for winners or other contributors, settlements could be much more granular and instant through digital currencies. Various smart contracts could be constructed with citizens and groups to better clarify the role of everyone in the process.

  Melanie Swan, founder of the Institute for Blockchain Studies, argu
es that blockchain technology might have a maturing impact on how society approaches topics like governance, independence, and civic duty. “It might seem harder to let go of centralized authority in matters of government and economics as opposed to culture and information, but there is no reason that social maturity could not develop similarly in this context.”62

  Clearly, the next-generation Internet provides profound new opportunities. The main challenges are not technological. One cautionary example: Obama’s 2008 campaign created an expansive Internet platform, MyBarackObama.com, that gave supporters tools to organize themselves, create communities, raise money, and induce people not only to vote but to get involved in the Obama campaign. What emerged was an unprecedented force: thirteen million supporters connected to one another over the Internet, and self-organized to build thirty-five thousand communities of people with common interests. When young people chanted “Yes We Can,” it wasn’t just a slogan of hope; it was an affirmation of collective power.

  However, in 2012 the Obama campaign shifted from citizen engagement to “big data,” replacing “Yes We Can” with “We Know You.” It used data to swing voters and target supporters for funds. The campaign won the election, but relegated citizens to consumption of its messages. The big data strategy had fewer risks than a strategy of self-organizing communities.

  During both his terms the president did take important steps to engage citizens, primarily through “Challenges,” which are elaborate contests for innovative ideas. But in his critical second campaign, Obama failed to engage citizens and missed a historic opportunity to strengthen government legitimacy. In the end, even President Obama, who had been called “The First Internet President,” took the expedient route to power, using social media to broadcast messages and raise funds through data-enriched targeted advertising online.