Blockchain-Based Commons Organizations

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David Bollier:

"Here is a rudimentary example of how the blockchain might be used to build efficient, commons-based alternatives to conventional businesses. In the US, former Federal Communications Commission Chairman Reed Hundt has proposed using blockchain technology to create distributed networks of solar power on residential houses, coordinated as commons. The blockchain would keep track of how much energy a given homeowner generates and shares with others, and how much is consumed. In effect the system would enable the efficient organization of decentralized solar grids via a “green currency” that could serve as a medium of exchange within solar microgrids or networks, which in turn could help propel adoption of solar panels.

The blockchain amounts to a network-based architecture for enabling commons-based governance. It could provide a rudimentary (or eventually sophisticated) framework for versatile forms of social exchange and collective governance. It would do this by serving as an accounting infrastructure for value-sharing among participants in a digital commons.

One potential application, for example, is smart contracts. These are dynamic software modules operating in an architecture of shared protocols, much like TCP/IP for the Internet or http for the World Wide Web. The protocols would be designed to let people assign standardized legal instructions to “smart” software agents on open networks.

Smart contracts would avoid the lengthy written documents that lawyers must write and review, and the “click-through” licenses used on websites and end-user licensing agreements for software. They would also avoid outside enforcement bodies such as courts. Instead, smart contracts would use modules of code to enter into and consummate “transactions” online, as authorized by individual users. The smart contracts could be used to structure any number of relationships in online milieus – new types of markets, for example, but also social commons in which “social currencies” that kept track of people’s contributions to the collective, their cumulative reputation or free-riding. While self-enforcing smart contracts could obviously facilitate market exchange, they could also facilitate nonmarket social exchange and group solidarity (by enframing gift exchange circuits, one-way philanthropy, indirect reciprocity, etc.).

While smart contracts are not yet operational, there are many serious projects and corporations attempting to use cryptocurrency principles to build an operational legal system based on selfexecuting code alone. One leading innovator is Ethereum, a project that is developing a blockchain “virtual machine” that can securely record and validate transactions." (