Blockchain Revolution

WHO WILL LEAD A REVOLUTION?
In 1992, MIT computer scientist David Clark said, “We reject kings, presidents, and
voting. We believe in rough consensus and running code.”
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That was the mantra for
stewards of the first generation of the Internet. It was voiced at a time when most
people could scarcely imagine how the Internet would become a new medium of
human communications, one that would arguably surpass previous media in its
importance for society and daily life. Clark’s words embodied a philosophy for the
leadership and governance of a global resource that was radically different from the
norm, yet one that engendered a remarkably effective governance ecosystem.
Since the end of World War II, state-based institutions have governed important
global resources. Two of the most powerful—the International Monetary Fund and the
World Trade Organization—were born at the Bretton Woods Conference in 1944. The
United Nations and other groups under its umbrella, such as the World Health
Organization, received a wide berth to exercise their monopoly on global problem
solving. These organizations were hierarchical by design, because hierarchies were
the dominant paradigm during the first half of a war-torn century. But these industrial-
scale solutions are ill suited to the challenges of the digital era. The rise of the Internet
marked a significant departure from the traditional culture of governance.

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In 1992, most Internet traffic was e-mail. The graphical browser that enabled Tim
Berners-Lee’s extraordinary World Wide Web was two years away. Most people
weren’t connected and didn’t understand the technology. Many of the important
institutions that would come to steward this important global resource were either
embryonic or nonexistent. Barely four years old was the Internet Engineering Task
Force, an international community that handles many aspects of Internet governance.
The International Corporation for Assigned Names and Numbers (ICANN), which
delivers essential services such as domain names, was six years away from existence;
and Vint Cerf and Bob Kahn were just recruiting people for what would ultimately
become the Internet Society.
The second generation of the Internet enjoys much of the same spirit and
enthusiasm for openness and aversion to hierarchies, manifested in the ethos of
Satoshi, Voorhees, Antonopoulos, Szabo, and Ver. Open source is a great organizing
principle but it’s not a modus operandi for moving forward. As much as open source
has transformed many institutions in society, we still need coordination, organization,
and leadership. Open source projects like Wikipedia and Linux, despite their
meritocratic principles, still have benevolent dictators in Jimmy Wales and Linus
Torvalds.
To his credit, Satoshi Nakamoto aligned stakeholder incentives by coding
principles of distributed power, networked integrity, indisputable value, stakeholder
rights (including privacy, security, and ownership), and inclusiveness into the
technology. As a result, the technology has been able to thrive in the early years,
blossoming into the ecosystem we know today. Still, this deistic hands-off approach is
starting to show signs of strain. As with all disruptive technologies, there are
competing views in the blockchain ecosystem. Even the core blockchain contingent
has split into different cryptocamps, each advocating a separate agenda.
Brian Forde, the former White House insider and blockchain advocate who now
heads MIT’s Digital Currency Initiative, said, “If you look at the block-size debate, is
it really a debate about block size? In the media, it’s a debate about block size, but I
think what we’re seeing is that it’s also a debate on governance.”
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What kind of
governance, and more specifically, what kind of leadership is needed? Indeed, Mike
Hearn, a prominent bitcoin core developer, caused quite a stir in January 2015, when
he wrote a farewell letter to the industry foretelling bitcoin’s imminent demise. In it,
he outlined a few pressing challenges facing the industry; namely, that important
technical standards questions had gone unanswered and that there was discord and
confusion in the ranks of the community. Hearn’s conclusion was that these
challenges would cause bitcoin to fail. We disagree. Indeed, what Hearn intended as a
damning critique of bitcoin’s shortcomings became, in our eyes, one of the most
eloquent treatises on the importance of multistakeholder governance, based on

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transparency, merit, and collaboration. Code alone is just a tool. For this technology to
reach its next stage and fulfill its long-term promise, humans must lead. We now need
all constituents—all stakeholders in the network—to come together and address some
mission-critical issues.
We’ve already outlined some of the showstoppers. They are significant. But they
are challenges to this revolution’s success, not reasons to oppose it. To date, many
issues are still unsolved and many questions unanswered, with little collective
movement to resolve them. How will the technology scale, and can we scale it
without destroying the physical environment? Will powerful forces choke innovation
or co-opt it? How will we resolve controversial standards questions without reverting
to hierarchy?
How to answer those questions has been the focus of our research over the last
two years. We found that, instead of state-based institutions, we need collaborations of
civil society, private sector, government, and individual stakeholders in nonstate
networks. Call them global solution networks (GSNs). These Web-based networks are
now proliferating, achieving new forms of cooperation, social change, and even the
production of global public value.
One of the most important is the Internet itself—curated, orchestrated, and
otherwise governed by a once-unthinkable collection of individuals, civil society
organizations, and corporations, with the tacit and sometimes active support of nation-
states. But no government, country, corporation, or state-based institution controls the
Internet. It works. In doing so, it has proven that diverse stakeholders can effectively
steward a global resource by inclusiveness, consensus, and transparency.
The lessons are clear. Good governance of such complex global innovations is not
the job of government alone. Nor can we leave it to the private sector: commercial
interests are insufficient to ensure that this resource serves society. Rather, we need all
stakeholders globally to collaborate and provide leadership.