Michel Bauwens in Conversation about Web3

A translation of an online mini-presentation in which French commoners asked me for an assessment of Web3 in the context of the commons movement.

The original French-language transcript, uncorrected by myself, is available via:

https://pad.lescommuns.org/CAT-P2P-Financements-communs-crypto-Conf-Michel_Bauwens_23juil2024#

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"We will discuss the role of crypto-technologies and cryptocurrencies in the service of ecological and social transitions. For those with an ecological consciousness, it is sometimes difficult to have an interest in these things. At first glance, one might have completely justified criticisms, but it is good to see things from multiple perspectives.

First, there is indeed the general critique of technology, that many people in ecological movements see technology as something that creates more distance between humans and nature, controlled by capitalism, etc. Particularly with Bitcoin, it is a technology that uses a tremendous amount of energy to create digital currency.

Here, I might start by saying just anecdotally that it was on the P2P Foundation forum that Satoshi Nakamoto announced his project, and apparently, I was also the first person to tweet about the birth of Bitcoin, but that's of course anecdotal and not substantial, but it does create a affective bond. However, it is true that initially, I was not very excited myself, partly because of how this money was produced, but very quickly, I believe one must acknowledge the birth of something historically significant. It is the first form of money that is globally scaleable and socially sovereign. That is not marginal There were thousands of 'social' local currencies that did not scale, and no'international' currency that did not depend on imperial power, such as the dollar does.

These nation-state currencies are commodity currencies that follow supply and demand to determine their value.

The fact that we have a currency that is scaled globally, attracting value and operating without the state [and the central bank system], is something historic. I would say that at present the Bitcoin cryptocurrency functions somewhat like gold, enabling arbitration for global risks, but it is also especially valuable for activists to survive during times of repression and generalized surveillance by states. Remember Assange, who was undoubtedly the first whose accounts were cut off, thus becoming dependent on the use of such tools for the survival of Wikileaks and himself. Today, as there are masses of dissidents whose access to financial means is cut off, this is something that is not insignificant. There are now many other crypto-currencies that are domain-specific with speciaized functions that cannot be carried out by non-programmable currencies, and many tokens function as microshares to invest in new infrastructural projects, that are especially interesting as they can finance the labor of coders, but also of the many others needed in these complex global projects.

From stock and profit accounting to planetary accounting

Bitcoin operates from the start with planetary accounting, through its universal ledger, which is also very important to me.

It's time for my little talk on accounting so that I can impress on you how important it is, as it reflects and organizes how we see the world and the value flows within it. It basically determines who gets what.

We found the first traces of accounting in Mesopotamia, in Sumer, where the state was born. There, it was the temples that managed the inflow and outflow of rice stocks, kept track on the taxes on this rice, and of the debts of individuals. So, accounting is not neutral. It is something very important in human history, marking the birth of writing and numbers. It marks the birth of a class, an elite that can write, and of institutions that detach from society, thus it marks the birth of the state at the same time, and of the extraction and redistribution of value, that are no longer determined by kinship, but by property and power.

In the 14th century, double-entry bookkeeping was formalized by a Franciscan monk in Italy. This allowed capitalism to grow as the dominant model in Western society.

The problem with this type of private, 'corporate' accounting is that it is essentially 'narcissistic': “Does my entity add capital? Does it make a profit?” There is no vision of the ecosystem, so capitalist accounting does not allow one to see the state of an ecosystem. It can neither see the 'environment', the more than human web of life, nor even the social dislocations occuring in the human communities and society. It is blind to what is outside of its own transactional space.

So now we have a technology that allows universal, open, ecosystemic accounting, which is not trivial. I participated in a study a few years ago, called 'P2P Value'. We studied 300 communities practicing what we called “peer production,” based on permissionless contributions in open ecosystems, such as is practiced in open-source and open hardware communities. Even before crypto, 75% of these communities used contributive accounting. This type of accounting is based on a declared value sovereignty by these communities, who decide to value other types of contributions, that neither the state nor the market can fund directly, and so they divert part of the market an state generated value, to fund the work on their own collective infrastructures. I will come back to this, but this is now done systematically in the crypto communities and is called 'public goods' funding.

Continuing our 'P2P Value' investigations, we found flow accounting and thermodynamic accounting, two other forms of accounting that were not practiced at any scale before the advent of these new digital networks.

The flow accounting software is called “resources, agents, events", i.e. REA. It abandons double-entry accounting, allowing anyone who makes a transaction to know their 3D place in the ecosystem. It changes the vision and practice of value in these communities. As double-entry is so closely linked to the domination of the capitalist market, abandoning it signals a post-capitalist phase in our value perception.

Thermodynamic flows allow seeing not only the flow of goods but of matter and energy, going beyond “accounts” like the 3P (People, Planet, and Profits). Here we truly talk about flow accounting, seeing the flow of matter and energy alongside monetary value flow and separating them.

I give an example to show how it could work. I found a number of prototypes and experiments. For example, the project I saw in South Korea is called the Commodity Ecology Platform. It combines 850 bio-regions with 130 specific commodity flows, linked to the idea of bio-regional blockchain and five nested geographical scales, creating bioregional, circular supply chains. But these people no longer want to use the term supply chain because they are more like 3D ecosystems, managing monetary, material, and energy flows to create “context-based sustainability.” It's not about rationing or centralized planning to survive ecological or resource crises, which could induce a totalitarian, top-down society based on rationing. Instead, we can envision systems where commons institutions determine maximum flows, protecting the vital stocks and their regenerative capacity for the longer term, and making them visible to every agent in the system, providing freedom to act with knowledge of limits without necessarily imposing what must be done. The system establishes limits, but allows freedom of adaptation and choice within those limits.

This promise is crucial for maintaining relatively free societies under resource constraints.

Before civilization, defined as a society with classes, labor division, and detached institutions replacing kin-based systems, we had hegemonic value standards in kin and tribal worlds: commons and gifting. In pre-civilizational societies, gift economies were important, creating obligations to give back within or between communities. Commoning is somewhat different as it allows to contribute to a collective resource, and to jointly benefit from it, f.e. when the Amish community builds a house for a newly married couple, it is creating communal benefits rather than individual gifts that need to be returned.

Open source was a historical pivot enabling global work coordination outside full state and market control. It's not that their influence doesn't exist, but it co-exists in a larger container with the relatively autonomous social coordination dynamics and the logic of maintaining and protecting the commons. While not fully independent, it allowed collective project creation and solution-finding outside state and market dominance. The weakness of the open source and free software model is and was often the lack of core collective work funding, with large corporations like IBM influencing open-source technologies through their support of that core collective infrastructure. This dependency then leads to all kinds of distortions.

Crypto models introduced distributed financing, allowing project crowdfunding, originally through Initial Coin Offerings (ICOs). This distribution made projects less dependent on large investors, with tokens functioning as micro-shares subject to precise rules. The new web3 institutional and coded mechanisms of governance, which aim to align various stakeholders groups through form so of 'polycentric governance', aims to balance the various influences, for example, the one dollar one vote of the investors is compensated with the one contributor, and votes/influence according to the length and depth of the contribution. See their technical innovations such as quadratic voting, which whould be considered anti-oligarchic governance mechanisms.

However, technological governance can also be seen as “regression to the code,” with coded rules protecting communities, evidenced by Ethereum’s response to a hack by reversing the digital timer and maintaining consensus on the situation before the hack. In this case, the community ethic clearly prevailed over the hardcoded governance mechanisms.

So again, to recapitulate, if open source enabled global work coordination, then crypto added a funding layer for core collective work. enabling continuous self-infrastructuring. Further advancements include self-taxation and funding for public goods through Gitcoin and quadratic funding. Retroactive funding can support past contributors. Think about it: a non-state actor that can tax itself and fund its own collective action problems, relatively autonomous of the market-state nexus.

Crypto can also be seen as an exodus strategy, providing arbitrage between nation-states, enabling digital nomads to seek better living and working conditions and maintain alternative lifestyles. This trend is akin to early Christian monasticism, creating new life forms amid crisis. The monastic system combined a hyperlocal focus based on their craft-agrarian capabilities, with a continent-wide exchange of knowledge by the educated clergy, which was at home throughout the continent, i.e. essentially nomadic as well.

Web 3 technologies allow alternative learning and culture creation, challenging traditional city-based innovation centers. Using the vocabulary of Jordan Hall, we could say that this post-civilizational form of organizing 'trans-locally', attempts to replace the fixed city, as seat of innovation through their dense interconnections, with a Civium, a network of event temporary gatherings, which similarly obtain very high levels of interconnected peer to peer learning. Edge City Esmeralda, had 1,000 registered participants, and during their month of aggregation, self-organized 17 different events per day. Not just learning, but creating a convivial culture that functions 'across borders'.

Creating “coordinations” and “network states” offers new forms of community and sovereignty, with events like Edge City Esmeralda demonstrating intense learning and community-building.

In conclusion, Web 3 technologies offer innovative potentials for managing global work, funding collective projects, and creating new societal models, avoiding localist ecological bubbles and leveraging crypto’s flexibility for ecological and social goals.