Cryptoeconomics as a Limitation on Governance
* Article: Cryptoeconomics as a Limitation on Governance. By Nathan Schneider.
URL = https://osf.io/wzf85/?view_only=a10581ae9a804aa197ac39ebbba05766
Contextual Quote
1.
"What became of trust? De Filippi et al. (2020) conclude that while the distributed-ledger technology underlying Bitcoin and its progeny has not fully escaped trust, it has produced a new kind of “confidence machine. ”The partial shift from trust to confidence transfers governance burdens from people to technical systems, inviting that renaissance in designs for systems of governance."
- Nathan Schneider and Primavera De Filippi [1]
2.
"The economics in cryptoeconomics raises a particular set of anxieties. Critics have long warned against the expansion of economic logics, crowding out space for vigorous politics in public life. From the Zapatista insurgents of southern Mexico (Hayden, 2002) to political theorists like William Davies(2014) and Wendy Brown (2015), the “neoliberal” aspiration for economics to guide all aspects of society represents a threat to democratic governance and human personhood itself."
- Nathan Schneider [2]
Summary
"Governance practices in distributed-ledger systems have grown increasingly diverse and diffuse, while retaining a commitment to cryptoeconomics — the use of economic incentives to guide user behavior, in tandem with cryptographic technology. In the space of a few years, cryptoeconomics has introduced advances in techniques for self-governance. But reliance on cryptoeconomics also introduces limitations on governance possibilities. Drawing on earlier critiques of how economic logics can erode democracy, this paper identifies specific limitations that cryptoeconomic governance faces. It contends that, to overcome these limitations, designers should envelop cryptoeconomics within a logic of politics capable of seeing beyond economic metrics for human flourishing and the common good."
Excerpt
What is Cryptoeconomics ?
Nathan Schneider:
"Governance options fall away when institutions seek to diminish the space of trust? What does the machine fail to measure? These questions are especially urgent to the extent that distributed ledger technology represents a kind of prefigurative politics (Leach, 2013), as many practitioners seek to replace the institutional infrastructure of political and economic life(Dicker, 2021; Faustino, 2019; Swartz, 2017). If blockchains and their ilk are the germ of a future society, or at least some important subset of it, what kind of society will they germinate? I refer to the logic that undergirds Bitcoin, derivative blockchains, and other distributed-ledger technologies with a colloquialism among practitioners, cryptoeconomics. The industry publication Coin Desk defines this “crucial concept” as “an area of applied cryptography that takes economic incentives and economic theory into account” — neither abstract cryptography nor economics but a practical fusion of the two."