Digital Asset Ecology

=Discussion=:

David Bollier and John H. Clippinger:

"What is clear is that we are seeing a new kind of highly distributed, self-governing infrastructure that profoundly alters one of the most fundamental precepts of human social and economic organization – the formal recognition and management of identities, access rights to resources and the management of risk. In this new data ecology, virtually anything can become a “digital asset” – identities, currencies, securities, contracts, mortgages, derivatives, goods, services, rewards, genome, licenses, titles, certificates, and much more. The identity, value and security of such assets can be verified through a variety of sophisticated new authentication and cryptographic methods such as OpenID Connect, OAuth 2, “zero knowledge proofs, ”Byzantine Fault Tolerance, Merkel Trees, and homographic encryption – opening the door for entirely new forms of social and market exchange. This “datafication of everything” is already having significant ramifications for existing institutions of government, commerce and international relations. After all, when all significant digital transactions and behaviors can be logged and monitored – and existing institutions are proving ill-equipped to provide reliable, transparent governance and accountability – it is only natural that people will wish to develop new forms of digitally based regulation and governance. Rather than resorting to cumbersome and ineffectual forms of regulatory oversight and intervention, such as “notification and consent,” “do not collect” lists and “data retention” directives, new digital platforms enable “performance based” regulation and governance that can use government- sanctioned algorithms and APIs to provide more effective, less corruptible, real-time oversight. There are significant differences between this new “digital asset ecology” of the Internet and its “content and social media” predecessor. In social media, violations of privacy are often dismissed either as inexorable costs of modern life or nonconsequential matters – “get over it” events. But now the Internet has become a mission-critical infrastructure for all forms of health, defense, financial, transportation and sovereign interactions. As a result, privacy and security take on whole new meaning, gravity and urgency when verifying and trans-porting trillions of dollars for Central Banks or in controlling military assets such as people, satellites and drones. Failures of privacy– that is, unwanted and illegitimate surveillance, and the subversion of trusted connections, controls, relationships and institutions – are not casual matters, “get over it” events. They directly affect national security, sovereignty, and the trust and wealth of pillar institutions, thereby potentially invoking the exercise of naked “kinetic” power. The fusion of the physical and the digital in the new data ecology creates unprecedented opportunities for the design and testing of new kinds of Decentralized Autonomous Organizations, Authorities and Enterprises. Rather than have essential institutional functions (such as credentialing, enrollment, authentication, authorization, regulatory oversight, auditing, enforcement, dispute resolution, market making and clearing) be physical and human-dependent processes, it is now possible, indeed, even necessary, to make such processes digital, algorithmic, autonomous, transparent and self-correcting. This change not only raises the prospect for resolving the “who guards the guards” problem, it also has the potential to resolve a wide range of institutional challenges involving collective action, reputational integrity, systemic risk oversight, and the protected sharing of confidential data. When traditional governance institutions and mechanisms are embedded in a data ecology, many forms of corruption, collusion, fraud, free riders, deception and coercion issues can be addressed through the “mechanism design” of institutions, policies and practices. These autonomous mechanisms can provably resolve, or at least, reduce the incidence of these failures. What until the present has had to be framed as an intractable “political matter” around oversight, fair representation, rule making and adjudication, can now be replaced or at least supplemented by algorithms and software agents with highly focused, independent and accountable human oversight. From this perspective, institutional and regulatory design challenges become “performance and evidence based” – not ideological or subject to hidden special interests. In this sense, the design of institutional and governance mechanisms become a new category of social technology, one that is replicable, testable, scalable, and potentially a beneficiary of the “magic” of Moore’s Law. It is hard to imagine a future in which governance is not regarded as an inevitable cost and source of failure, but rather a variable cost subject to technological innovation, and itself a creator of value!"

(https://www.researchgate.net/publication/274566666_Organic_Governance)