Blockchain Ethics

Class 7 Reading Responses [Funding Public Goods and Wealth Inequality]

I think if we want to move to a world where open-source development and platforms are accessible and used by anyone then we have to think about the right incentive structures that would be needed to achieve this goal. Incentives should be built around marketplace, initial adoption and cadenced reviews of the protocol:

  1. Marketplace: How can we incentivize market vendors to accept new currency and for users to use it regularly? To create an ecosystem, you might make it easier for vendors to accept and transact in a certain currency that allows them to avoid unnecessary fees that they have to pay with credit card companies today. On the user side, they just want to be able to convert between currencies and fiat easily, while have their currency hold value in their every day. User incentives can be driven by rewards for having them get friends to sign-up – this achieves broader network effects.
  2. Initial Adoption: Users must understand why they should put their money into a certain coin, given that the industry is absolutely saturated and each coin sometimes have large differences or use cases. This comes down to consumer education and comprehension of the product. It would also be strongly tied to the marketplace incentives.
  3. Cadenced Reviews of the Protocol: Given that most of these protocols start out with a smaller community with the goal of becoming its own self-governing, larger community, there needs to be accountability standards set to review these platforms on a cadenced basis so that founders aren’t running into the issue of launching a successful project, and then no one steps up to grow the platform. We almost see a tragedy of the commons effect here, so it might be helpful to incentivize people outside the founder community early on so that you can think ahead about how you want the protocol to grow overtime.

In regards to wealth inequality, I believe that most of it exists because there is an educational knowledge gap that exists in the industry, I think it is almost hypocritical that the blockchain/crypto community preaches open access to these systems and no governance, when most of the wealth is concentrated in than 30 people as we saw in the Forbes article. Moreover, most of the mining power of these protocols can be found in 20-30 people worldwide. If we really want these open systems to take shape and evolve the world, we can’t just keep teaching the existing community new tricks/up-keep. Right now, as people expand their projects they are so focused on the developer community that there is little regard for the rest of the stakeholders in the ecosystem. Even within the developer community I feel like there is a bias towards only having certain people in the “know”. I will say that this industry is moving incredibly fast, and there are hundreds of new projects being developed almost every week, so it becomes very hard to track. Does this mean we should have more focus on a few big open developer projects, so that the community can easily focus on a few AND there can be better accountability in advertising new projects/platform needs? This also gets back to my first point on education. Besides developers, there exist many more stakeholders in the ecosystem including business service providers, miners, end users. There is very little standardization in how people are educated on what platforms exist, how to engage with them effectively, which ones to choose for what use case etc. When accessible education for new systems is missing, then you see inequality start to grow, because only a subset of people have the correct contacts to understand what they are investing time and money in. I think some sort of broader community governance or policy model around education of this new industry would be very helpful.

The article I found the most interesting this week was A Conflict of Crypto Visions by Yassine Elmandjra and Arjun Balaji because it broke down in a very concise way why there exists two radically different schools of thought within the cryptocurrency space. The division between constrained and unconstrained really exemplifies why the Bitcoin world is considered so square when compared to the unicorns and rainbows themes that follows the Ethereum world.

One is pragmatic about what they believe are the natural laws of the world while the other sees that pragmatism as a lack imagination and too constraining. I knew about the Bitcoin Maximalists of the world but I also didn’t know that it was originated by Vitalik Buterin as an attack towards their “constrained” mindset around cryptocurrencies, this initially derogatory term thrown at the Bitcoin world from Ethereum’s de facto leader exemplifies the religious vitriol that debates between the two visions usually devolve into.

An interesting intersection between these two worlds appears to be Zcash. With its initIal Dev Fund, that gets described as a tax, and the Electric Coin Offering it doesn’t fit into Bitcoin’s bottom-up governance approach but it also doesn’t have the Ethereum’s turing-completeness. I found the first article A Personal Letter About “The Possibility of a New Zcash Dev Fund” by Zooko Wilcox really fascinating in its altruism. They are willing to accept that the Zcash community will not want to fund development through the Dev Fund “tax” and even if it does, it does, it might not want the Electric Coin Company to be the benefactors of said fund. Also, not only are they willing to accept that fate, but they have the funds and will to program these changes themselves. The cynic in me wants to think that they “know” no one else has the domain knowledge and expertise that they do at the Electric Coin Company but it would be interesting to see what happens to the community if they decide not to continue funding them. After being paid for their work, will they continue working for free as volunteers? Or will be another open source project with limited support as described in “Summary of Roads and Bridges” by Nadia Eghbal.

Hi all,

Given my project proposal (GitBlock) I found this week’s readings very intriguing and relevant. The Ford Foundation report review made a good point that parent/mother projects are often poorly maintained and the international implications for open source development are absent from current discussion. Furthermore, a lot of discussion was aimed at the concentration of cryptocurrency, especially Bitcoin. While some have argued for revised estimates and reevaluation, a majority if not all adjustments yield an estimate of over 50% being held by sub 10% of people. So we know the Lorentz curve ain’t looking too good. However, there was less discussion into the implications of the concentration outside of the obvious collusion remarks, The UBI piece had a few interesting incentive schemes (e.g. personal currencies and attaining value through reputation, referral rewards systems, etc.), but by far the most interesting piece was the conflict of Crypto.

The part about governance intrigued me the most as it pointed to several fundamental lapses in blockchain discussions. Law is a human construct thus any adaption is to be subjective and any generalized extrapolation to avoid said bias would fail to be robust as the needs of the economy and society continue to evolve as we evolve. In other words, from the unconstrained pov, the path to a solution involves the modification of existing systems and thus interfacing with current government bodies, which may seem appropriate now even as a means to aid the transition, but it is fundamentally flawed. Law as we know it today is subjective and characteristic to the period in which it was written and is constantly updated. Blockchain is not known for its robustness, especially not the rules that are hard coded and autonomously executed. Software automation or on-chain governance is the big question then now, isn’t it? A rigid implementation is inherently not fully representative and fails to encapsulate future issues, but allowing real-time modification with a formalized governance would add subjectivity and relegate the control to humans. And now you are back to trusting each other. Both are bad, but one is worse than the other. If I had to choose, I would go with a rigid implementation given my last point, but I do think there are more than 2 options. In a very non-practical philosophical sense, a 3rd option could be to initialize a new chain in such transitions as people renew themselves in shifting time periods.

Ok so now for more practical solutions to problems like funding. I think the founder’s reward implemented by Zcash was pretty well implemented and the cycle of pouring the taxes back into the community by maintaining the software and code base was directly felt by users, thus it worked well. In terms of funding open source development in general, check out GitBlock! Lol. Man it’s a hard problem and if I could just come up with the solution, then hell we wouldn’t have commercial and corporate products with an increasingly out of date backend. Personally, I think people should be rewarded for their hard work which is why I implemented a trickle down of a particular token for number of users weighted by age of the branch (for more information check out my proposal).

I’ve already talked about the wealth inequality and different arguments for skewed data, but regardless of the adjustment, it still remains to be concentrated in the hands of people disproportionate to the size of the overall population, but not as bad as the wealth inequality in the U.S. One is atrocious and the other is really bad. Both need fixing. Stop debating the comparison and let’s fix it. As for public goods, I think I’ve touched briefly upon the idea of taxes and incentivizing contributions and I think Zcash’s founder’s reward is very comparable to today’s taxes as it is used to provide a necessary public service (dev fund and some government service, like law enforcement).

The brunt of my response was the first part and my philosophical input to governance, but other than that and a shameless plug for GitBlock, most of the content was self-explanatory and interesting thought experiments with a bit of empirical evidence with emerging projects. If you have read this far, I appreciate it and have a good day. (Sorry I couldn’t come up with anything more interesting 0_0)