Blockchain, DAOs, and the Future of Government

blockchain-daos-and-the-future-of-government

Several weeks ago, I authored a blog post on the subject of the emerging role of AI for government applications, which explored the use of AI in supporting representative decision making using massively scaled simulations. Global issues like climate change, income inequality, terrorism, corruption, and tax evasion are all complex global problems that transcend national borders. In my article, I suggested that governments could use AI-based simulations to search through solutions and suggest “intelligent” decisions or next steps, which would benefit large groups of people. However, what if that decision making is turned on its head, and rather than our representative governments making those decisions for us, each of us is given the power to drive those decisions, and see that those decisions are enforced?

Enter the decentralized autonomous organization (DAO), the latest buzzword that is linked to the blockchain.  A DAO is a virtual autonomous organization, in which the functions of the organization exist in software, and the laws governing the organization’s functions are set into smart contracts that become automatically enforceable if a set of defined conditions are met. As a result, the DAO becomes a company that runs by itself, without a centralized governing body. The first implementation of DAO exists today as an investment or venture capital (VC) fund that has raised $168 million from more than 10,000 people in a crowdfunding effort spearheaded by blockchain providers Slock.it and Ethereum. The funding has been done through Ether, the cryptocurrency that exists on the Ethereum blockchain network, and which is a rival to bitcoin. The DAO, as it exists today, is intended to invest the money of its backers into startups or projects that are voted on by the group.

While there are teething issues around how democratic the voting process is for the DAO, the important thing to remember is that we are witnessing the birth of a new paradigm of computing, which some might argue is the continuation of the blockchain paradigm that emerged around 2010, which calls for one giant computer for the world, where the rules and individual states of each node are shared across a common ledger, and trust between the nodes is enforced through cryptographic blockchains. This is the next logical shift from a world of individual computers that are networked, which started around the 1990s during the early days of the World Wide Web. The DAO is simply the continuation or evolution of the blockchain paradigm, and we are just now at the point of inception, with the paper describing the DAO published in April 2016.

DAO

(Source: Slock.it)

The DAO is very much an experiment, and there is a lot of skepticism surrounding it. There are clearly tweaks required, but just like bitcoin and the blockchain have started to enter the mainstream conversation, I expect the DAO will take a few years to mature before it becomes a framework for many other types of virtual organizations, businesses, or even governments. The DAO uses a decentralized governance model, in which each person with a stake in the organization has control of how the entity functions. With global trust in government and politics at a low point, and with traditional institutions going through a crisis of confidence, I believe there is a role for the DAO in the future of government.

Just like artificial intelligence (AI) and massively scaled simulations can help governments make decisions about complex problems, these tools combined with the blockchain and the DAO have the potential to create new financial systems, business models, and government institutions that transcend the traditional bureaucracies of nation states. Estonia’s radical e-residency program that allows anyone to obtain a digital identity and create a virtual company is just an example of how quickly ideas can mature and be implemented, when even 5 years ago the blockchain was virtually unknown. I also expect AI techniques like machine learning to start being utilized in conjunction with the blockchain and DAOs to improve their capabilities.

While these are all highly speculative ideas today, I expect the appetite for radical solutions to grow as debates heat up about such critical issues as climate change, geopolitical instability, and economics, to name just a few.

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