Public Goods and Blockchains

2020 COVID-19 Check-In

By:Matthew Prewitt (Twitter)

COVID-19 is casting a bright light on the tension between the individual and the collective. On one hand, the crisis demands a coordinated response at the national and global levels. It is no longer possible even to imagine ourselves as self-sufficient individuals. On the other hand, it pushes us into isolation, figuratively and literally.

So which is it? Are we one or many?

This is a perennial question. Getting it wrong in the sense of forced collectivity led to the ruinous totalitarianisms of the twentieth century. But, it is also possible to get it wrong through forced individuality, breaking social ties and pushing people to fend for themselves in spite of their natural interconnectedness.

In reality we are one, many, and everything in between; and the situation evolves over time. Our politics have failed to reflect this complexity. But our technology has arguably been even worse. The disasters wrought by Silicon Valley over the last two decades show that “more connectedness” is a bad mantra. Instead we need the right kind of connectedness, with the right (diverse) groups, at the right times.

I have long hoped that blockchain technology might address itself to this problem. By letting us organize in new ways with self-enforcing, reprogrammable rules, we might be able to finally breathe life into open, flexible, mid-sized units of organization that mediate between small actors (like individuals and families), and large ones (like corporations and governments). Once upon a time, things like civil society organizations and unions played this role (albeit imperfectly), smoothing the interface between the one and the many. But these have been almost entirely squashed by the governments and big companies to whom they were an obstacle to greater scale. Therefore, whether in our social media engagement or in our economic lives, we are increasingly vulnerable and uninsulated.

On the other hand, blockchain enthusiasts have too often embraced a radically individualistic vision, in which blockchain technology is a means for individuals to exempt themselves from collective life, achieve individual “sovereignty”, or otherwise leave behind some supposedly-less-enlightened masses. This exacerbates those problems that central power causes: alienation, disconnectedness, asociality, meaninglessness. The answer to “too much connectedness” is not “less connectedness” (or worse, “financial escape”). What we need is better connectedness: a connectedness that is flexible, open, and specifically tailored to addressing shared challenges.

Many blockchain projects exemplify that kind of vision. I want to highlight a few of them here.

Gitcoin

Everything Gitcoin does revolves around using blockchain technology to address public good problems — in particular, the problem of underfunded open source software maintenance. But the Gitcoin Grants program, in particular, is one of the most exciting developments of the past two years. It is worth pausing for a moment to explain the underlying idea that makes it so revolutionary.

Quadratic Funding is a practical social technology developed by Glen Weyl, Vitalik Buterin, and Zoë Hitzig (and now a central part of the RadicalxChange agenda) that addresses a classic economic problem: When it comes time to invest in broadly-shared goods, self-interest incentives tell us to do less than our share. Quadratic Funding is a formula for redesigning matching funds like those used in philanthropic campaigns, so that larger quantities of matching funds go to projects that have larger bases of support. This has the dual purpose of incentivizing small donors to contribute to shared projects even though their donation seems small (because it will generate an outsize match by broadening the support base for the project); and ensuring that projects supported only by a few wealthy donors do not draw much from the matching funds. Quadratic Funding has the potential to revolutionize everything from campaign finance to public infrastructure investment. 

Gitcoin has long been using Quadratic Funding to encourage donations to worthy open source software projects, but even more excitingly, they are now looking beyond software. Gitcoin extended the last Grants round to support COVID-19 research and response efforts. Now they are working on applying it for local economic relief. This is an incredibly important development because it places Quadratic Funding into its natural role of structuring hybrid public/private civic initiatives.

Think of it this way. Today, millions of Americans are going out of their way to support threatened businesses, by donating to crowdfunding campaigns, buying gift cards, and the like. At the same time, the government is printing money and handing it out more or less haphazardly to business owners who may or may not use it for its intended purpose of supporting communities by keeping people employed. In short, both the private and the public relief efforts are in chaos! The private ones are suboptimal because they favor businesses with rich friends rather than businesses that support communities. The public ones are suboptimal because they favor businesses with the ability to navigate bureaucracies — again, rather than the ones that support communities.

Quadratic Funding is a better way. Public funds should become matching pools, and private donations should flow through this mechanism. That way vital small businesses with broad community support, but lacking wealthy benefactors, would get the support they need. Gitcoin has all the right ideas.

Streamr

The data economy is one of the most glaring examples of a mismatch between our individualistic notions of property and the shared nature of value. Why? Because your data doesn’t only contain information about you. Text chats run between you and someone else. Your genetic information contains information about your family members. Your preferences for what shows to watch, or what foods to eat, are not just “personal information”. They indicate what your friends will probably like. And this is not a coincidence. It’s a symptom of the fact that we live in the world together. Your favorite shows are a fact not only about your life, but about the lives of all your friends — for each of them has a friend (you) who likes those shows.

Yet, when you bring “your” data to the marketplace by trading it to tech companies for free services, you act as though the data is exclusively yours, like your toothbrush or your shoes. This does not make sense. Worse, it leads to a market failure of historic proportions in which companies that control large networks extract the lions’ share of the value of millions of peoples’ data, without giving users a fair share of the pie.

This is one of the single biggest problems of our time. Ordinary people have been pushed aside in the rush to monetize the information produced by ordinary people.

The only way to solve it is through collective bargaining for data. This is a complex issue that will not ultimately be solved without regulatory change. But Streamr is forging ahead. They have built a system that lets you join a “data union”, aggregating data collected in your browser with hundreds or thousands of other users, and monetizing it collectively, through their token architecture.

It is a welcome first step in the journey toward a non-extractive data economy. We need more ambitious projects that address themselves to public problems of this magnitude.

Democracy Earth

Democracy Earth is building a non-plutocratic, decentralized governance system. With roots in an Argentinean democratization movement, they have already pushed the envelope by building better collective decision-making tools for use by real governments.

They are focused on the problem of decentralized unique identity and are at the vanguard of that research area. But even better, their ideas about identity dovetail with an attractive vision for how unique identities might actually interact with one another: They envision a universal basic income based on the idea that every person can mint tokens at the same rate of time. These tokens can then be used as “voice” in collective decisions, or as payment for other participants’ time. In short, they are building a collective action system that would also strive to generate a financial baseline for participants.

With integrations with DAOs such as MolochDAO, Democracy Earth remains steadfast in supporting new ways to organize, maintaining a strong focus on decentralization. Stay tuned for more developments from Democracy Earth later this year as their toolset matures.

Sustained Innovation

These projects remind us why blockchain technology is exciting: because despite its flaws and hurdles, it points the way towards better modes of flexible social collaboration. Follow these projects; help them work towards their goals, and root for them!

By experimenting with new primitives and cryptoeconomic toolsets, we can iterate more quickly in the effort to work better together. Some problems are just too big to solve alone, and now we have the tools to begin building democratic institutions that can scale appropriately for our collective needs, during times of dire necessity.

Leave a comment

Edited by: Steven McKie