A New Form of Governance

To date, all forms of organized human government have been an attempt to impose hierarchical order on an unruly and chaotic mass. There have been attempts made in the opposite direction: for example communism and anarchism, two forms of decentralized governance. These political ideologies (in their pure, theoretical form) promote a flat topology, that is, structure without hierarchy. In practice, neither of these forms of government have been lastingly effective in organizing any group of humans larger than Dunbar's number (https://en.wikipedia.org/wiki/Dunbar%27s_number).

What does this say about the nature of human governance? Dunbar's number is the theoretical upper limit on the number of stable social relationships that humans are able to form at any given time. Applying this to government, it seems we are able to arrange equitable and communal social organizations when we are able to maintain these stable social relationships with all of those being governed. Perhaps more important than these individual relationships, though, is the overall network effect that is gained by a highly-connected populace. When every individual is accountable to each other individual, nobody is able to rise up and seize power over the rest; they will be batted down at the first sign of foul play. This then begs the question: can we extend this social arrangement past the limit of Dunbar's number? Effectively, can we scale decentralized government?

In this author's opinion, the answer is a resounding yes. Social constructs following this paradigm have already been witnessed. The Occupy Wall Street movement, while short-lived, employed this governance strategy and was able to proliferate across the nation and globe in brief time. This is perhaps the best modern real-world example of decentralized governance that we have to examine, but it is far from the overall best example, so we will glaze over it in our discussion. Perhaps as we dicuss aspects of decentralized governance models in cyberspace, commonalities between these models will become apparent.

For more promising alternatives, we must look to the world of cyberspace. Much has been written about the supposed independence of cyberspace from so-called meatspace, and it is not the intent of the author to explore this admittedly fascinating concept. Thus we will focus instead on the ways in which communities on the internet have been able to self-govern, often without any conscious thought given to the governance process.

An excellent and idealized example of this would be IRC (Internet Relay Chat) channels, chat rooms which are created with a purpose or discussion topic in mind. IRC channels work on the client/server model of network architecure, and so does not represent a true peer-to-peer architecture, but elements of IRC moderation so exhibit traits of decentralized government. For example, while there are channel moderators who exercise ultimate ban and mute authority over the channel participants, this is a heavy-handed and not-oft-used method to maintain focus and order in the channel. Instead, channel participants are encouraged to self-moderate and to inform others when they are breaching the (often unwritten) rules of the channel.

How were these rules decided upon in the first place? Quite simply, whenever things become too hectic in the channel, the troublemaking activity is identified and discouraged from this point on. Interestingly, it is not necessary for all channel participants to be active when these holistic decisions are made. Rather, as long as each participant continues to be active in the channel, they will eventually either be involved in such a hectic situation themselves or see the behavior discouraged pre-emptively by another participant who has already been initiated, so to speak. Thus the "rules" are passed from participant to participant, until they become interwoven with the fabric of the channel itself.

In this way the channel gains its own character, and continues to attract those with whom its character is compatible. These channels can have revolving memberships of thousands, but as long as there is no sudden catastrophe which causes large swathes of the channel's core members to leave, this character will survive and evolve. In this context it would appear that we've somehow managed to beat Dunbar's number, at least in the limited context of the free interchange of ideas.

Can we do better, though? Is it possible to construct either a cyberspace or meatspace analog of this decentralized government which can provide its participants with lasting physical security? This is far from certain, but this author believes that we see the beginnings of such governance structures in the nascent cryptocurrency community.

Let us examine the Bitcoin network, open up the philosophical hood and see what makes it tick. First it must be said that Bitcoin is a transparent, decentralized, peer-to-peer network with an entirely flat topology. No node is privileged over any other node, and although each node is only aware of those to which it is directly connected, every node on the network can agree on the current state of the blockchain. This fact alone is enough to ensure that all nodes are "playing by the rules," for any node not playing by the rules would be orphaned by the network. But how do these nodes decide which rules to follow?

The governance structure of Bitcoin (if it does indeed have one) revolves around consensus. In order for any change to occur in the network, a consensus of participants must agree to and implement the change. To understand how consensus is reached, we must understand who the participants in the Bitcoin network are. This can be divided into three primary groups, with an transitory fourth that will be discussed later.

These three groups are: 1) the users who download and run the Bitcoin software 2) the developers who create and test the code, as well as innovating new features to improve the network, and 3) the miners, who use their technical accumen and entrepeneurship to verify the network and earn some of that sweet, sweet, bitcoin in the process.

It must be noted that these three groups are not mutually exclusive. A user may also be a developer or a miner, a developer may also mine bitcoin, and one would certainly hope that both developers and miners are users of the Bitcoin network. Rather, these distinctions serve to classify the activity that participants in the network engage in. When a person is operating a node on the bitcoin network, they are acting as a user. When a person is writing code or discussing improvements to the Bitcoin protocol, they are acting as a developer. When a person is committing their resources to operating expensive mining equipment and receiving bitcoin in return, they are acting as a miner. Again, these activities are not mutually exclusive, and one person may easily serve all three of these roles at different times, or even at the same time. For example, a miner may also be a developer who is advocating for miner-friendly changes to the protocol. In this instance, such a person would be acting both a miner and developer, exercising their power to the detriment of other users.

Would such a protocol change be implemented in the Bitcoin network? Likely not, for it would need to pass muster with the users. If users refuse to run a version of the Bitcoin software which does not respect their rights, then such a protocol change will never be implemented. Similarly, if users attempt to run a version of the software which does not respect the rights of miners, miners are under no obligation to include transactions from these users in blocks, effectively orphaning any would-be bad actors from the network. And if either users or miners do not support the protocol changes released by developers, then the developers have wasted their time creating software that will never be run. A final note: it should be remembered that none of these groups are monolithic -- that is, there can exist disagreement and animosity within each group.

That is the 2-bit explanation of governance in the Bitcoin network. Consensus must be achieved by a preponderance of users, developers, and miners for any "rule" to be implemented or changed. Furthermore, and perhaps this should have been mentioned earlier, each participant in the network has entered into this arrangement willingly, although not necessarily knowingly. This is key, as each participant must be left with a final vote once consensus is reached: they must be given the option to leave. In this way a character is formed, similar to the character formed by IRC channels. Those who understand and agree with this governance model and the decisions it implements will be drawn to the network, and those who disagree will be free to find a different network or form their own.

Earlier a fourth governing group was mentioned. These actors are not essential for the proper functioning of the network, but they are integral in providing the network with a bridge to meatspace. This fourth group can be called the exchanges. They represent large vested capital interests who profit from the interchange of bitcoin and fiat currency. These exchanges must be considered, as they exert significant political pressure on the bitcoin users, each of whom must live in meatspace and (most of whom) must pay taxes in fiat currency. However, I say this group is transitory, as only the physical reality of fiat-based governments makes them a necessity. It is entirely possible that we may one day move to a system that is more reflective of the governing ethos we see in bitcoin, and this governing system may very well use bitcoin or something quite like it to collect taxes and provide social support. At this point we would no longer need exchanges to provide their currently-vital service, as technological improvements to the Bitcoin protocol could allow for atomic currency swaps, allowing for the direct exchange of different types of currency without an intermediary.

In truth, exchanges are not absolutely essential today, as it is entirely possible to find somebody with either bitcoin or fiat cash and trade with them. What makes exchanges necessary is the economy of scale which Bitcoin currently operates at. As the network continues to scale, exchanges will become more important as gatekeepers at the border of meatspace and cyberspace. It is this author's opinion that as time goes on, this border will continue to blur until there is no need for fiat currency at all. As the meme goes:

"You're telling me someday I can sell my bitcoin for a million dollars?"