Governance and Incentive Systems of Blockchain-Based Social Networks
* Article: The Common Factory: Governance and Incentive Systems of Blockchain-based Social Networks. By Felix Fritsch. Conference Paper, June 2019
CSC 2019 – 15th International Conference on Sociocybernetics Urbino, Italy – 25-29 June 2019 ; “Dark Ages 2.0”: Social Media And Their Impact Paper No. #43
Contextual Quote
"Blockchain is inconceivable without commodification – its very architecture rests on economic incentives coordinating independent actors, and its raison d’etre is the dis-intermediation of digital asset transfer. But their unique features not only allow blockchains to dis-intermediate and reorganize existing markets, but also to create new markets under previously unfavorable conditions. They thus constitute a crucial element in looming processes of formal subsumption, pushing the frontiers of capitalism ever further into the sphere of social relations previously unattainable to commodification. What’s more, through incentive systems rewarding specific interactions and punishing others, these technologies open the door for what Marx referred to as real subsumption – the systematic restructuration of commodified relations along the needs of capitalist profit maximization – of hitherto not or only formally subsumed social spheres."
- Felix Fritsch [1]
Abstract:
"Blockchain architecture provides robust institutional infrastructure for distributed networks that fundamentally changes the ways groups organize online. Its applications go beyond existing digital commerce to commodify and transform social relations through tokenization, incentivization and rationalization. Crypto Social Networks promising to reward users financially for valuable contributions constitute a paragon of such subsumption through blockchain. These platforms organize value distribution among users along affective metrics and introduce various mechanisms that facilitate autonomous group governance. Their emergence both acknowledges the critique issued by digital labour scholars of hitherto exploitative platform-user relations and challenges their uncritical appliance of time-based labour theory of value to the digital realm.
Beyond simple commodification, blockchains and the code they operate are discussed as emerging public infrastructure for the transaction of private assets and the decentralized organization of groups – as digital commons facilitating the total subsumption of sociality under abstract capital. While blockchain is inherently commodified and constitutes the capstone of a digital ‚social factory‘, the specific alignment of token design, incentive systems and other governance mechanisms can lead to vastly different outcomes in power and revenue distribution. The empirical section is devoted to highlighting these differences through analysis of three emerging platforms Minds, Steem and HyperSpace along their token, incentive and governance systems. While the findings underline the devil in the details especially of tokenomics, they also show the immatureness of existing platforms, which finds expression in different blind spots depending on the distinct means and aims of each project."
Discussion
Felix Fritsch:
"Referred to as foundation of the ‘Internet of value’, blockchain is inconceivable without commodification – its very architecture rests on economic incentives coordinating independent actors, and its raison d’etre is the dis-intermediation of digital asset transfer. But their unique features not only allow blockchains to dis-intermediate and reorganize existing markets, but also to create new markets under previously unfavorable conditions. They thus constitute a crucial element in looming processes of formal subsumption, pushing the frontiers of capitalism ever further into the sphere of social relations previously unattainable to commodification. What’s more, through incentive systems rewarding specific interactions and punishing others, these technologies open the door for what Marx referred to as real subsumption – the systematic restructuration of commodified relations along the needs of capitalist profit maximization – of hitherto not or only formally subsumed social spheres. Its closest advocates, by and large critical of monopolist power but not of commodification itself, rather point at the liberating aspects encryption and decentralized markets entail for the individual. Beyond these, they forecast potentially extensive impact of blockchain-based governance on the organization of social and economic relations. They hold that fully distributed, automated governance mechanisms embodied by (combinations of) smart contracts are not dependent on the continued goodwill of any benevolent dictator acting as central guarantor of rights and agreements, but become self-executing entities, insusceptible to corruption by external powers. Public blockchains further provide permission-less access to transactional data and open source code of both base protocol and decentralized applications, which fundamentally challenges ownership of these technologies. These qualities, so its proponents, position blockchain as foundational to an emerging structure of digital commons that come into being as new technological reality.
Blockchain-based applications are not confined to digital commerce in terms of peer-to-peer and multi-sided markets, but also cover collaborative social media platforms and with them their nonprofessional users (Glaser 2017). Already, a multitude of blockchain-based projects explicitly seek to challenge social media behemoths with decentralized platforms that leave users more control and reward them financially for their interactions. Such Crypto Social Networks (CSNs) make a particularly good case for the study of the effects of blockchain on society as they allow observation both of the subsumption of social relations under the reign of capital and of the constitution of selfsustained digital communities in a new digital commons."