Blockchain Revolution

A NEW FRAMEWORK FOR BLOCKCHAIN GOVERNANCE
Rather than simply regulating, governments can improve the behavior of industries by
making them more transparent and boosting civic engagement—not as a substitute for
better regulation but as a complement to the existing systems. We believe effective
regulation and, by extension, effective governance come from a multistakeholder
approach where transparency and public participation are valued more highly and
weigh more heavily in decision making. For the first time in human history, nonstate,
multistakeholder networks are forming to solve global problems.
In recent decades, two major developments have provided the basis for a new
model. First, the advent of the Internet has created the means for stakeholders of all
sizes, down to individuals, to communicate, contribute resources, and coordinate
action. We no longer need government officials to convene for the rest of us to align
our goals and efforts. Second, businesses, academia, NGOs, and other nonstate
stakeholders have gained the ability to play an important role in global cooperative
efforts. There were no businesses, NGOs, or nonstate stakeholders at the table at
Bretton Woods. Today, these stakeholders routinely engage with governments to
address issues in all facets of society—from the governance of a global resource like
the Internet to addressing global problems like climate change and human trafficking.
The combination of these developments enables the new model. For a growing
list of global challenges, self-organizing collaborations can now achieve global
cooperation, governance, and problem solving—and make faster, stronger progress
than traditional state-based institutions.
In considering the foundation for a blockchain governance network, we pose a
number of critical questions and develop a framework for answering them:
How do we design such a governance network?
Do we create a new network from scratch or build around an existing
institution that already has a constituency that deals with international
financial issues?
What will be the mandate for this network and will it have the power to
implement and enforce policy?
In whose interests will a blockchain governance network act and to whom is
it accountable?
And critically, will nation-states actually cede any authority to a global
network?

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Overall, the ecosystem that governs the Internet is rich with lessons. That it has
become a global resource in so short a time is astounding, in no small part thanks to
strong leadership and governance and despite the powerful forces against it.
So who governs the first-generation Internet and how? A vast ecosystem of
companies, civil society organizations, software developers, academics, and
governments, namely the U.S. government, in an open, distributed, and collaborative
manner that we cannot measure by traditional command-and-control hierarchies and
frameworks. No governments or group of governments control the Internet or its
standards, though several U.S. government agencies once funded it.
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In the early days of the Internet, governments showed both restraint and foresight.
They showed restraint by limiting regulation and control throughout the Internet’s
evolution and they showed foresight by allowing the ecosystem to flourish before
trying to impose rules and regulations. This multistakeholder network worked for the
Internet, but we need to recognize that there will be a greater role for regulation of
blockchain technologies. Whereas the Internet democratized information, the
blockchain democratizes value and cuts to the core of traditional industries like
banking. Clearly there will be a regulatory role to ensure that consumers and citizens
are protected. Yet our research suggests that the Internet governance model is a good
template.
Questions persist over how much new leadership will come from the old Internet
governance community. Vint Cerf, who coinvented the Internet itself and led the
creation of the Internet Society and the Internet Engineering Task Force, which has
created virtually all the important Internet standards, suggested that a good starting
point for blockchain would be to create a BOF (Birds of a Feather) interest group
within the IETF.
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Initially, many organizations involved in Internet governance
viewed digital currencies and blockchain technologies as outside their purview, but
that is changing. The World Wide Web Consortium, W3C, has made Web payments a
priority, and blockchain is central to that discussion.
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Additionally, the Internet
Governance Forum (IGF) has hosted sessions about blockchain and bitcoin, where