Institutions – Humanity 3.0

Are “protocol institutions” on a blockchain formal or informal? How should we classify them?

A platypus is a mammal right (it has fur)? No wait, it is a bird (it has webbed feet, a beak, and lays eggs)?

As it happens a platypus is neither a mammal nor a bird — it is the sole living representative of its family and genus in the biologist’s taxonomy of the species.

It struck me this morning that perhaps blockchain protocol Institutions are similarly unique? Perhaps the old taxonomy of “informal institutions” versus “formal institutions” advanced by Douglass North, W.Richard Scott, and the other social scientists is not sufficiently developed to be useful in classification?

A core assumption from the very beginning of my intellectual pursuit here on Humanity 3.0 Blog is that institutions created by smart contracts and accessible via dApps should be classified as “informal institutions”.

I reached this conclusion by observing that the enforcement mechanism of a blockchain protocol institution is exclusion from participating in the group of dApp users who enjoy benefits of the institution, if/when they decide to deviate and not follow the protocol rules exactly.

For example, with a dApp enabling voting, here are the rules encoded in the underlying contract:

you must vote between the hours of 9-5pm,
you must select one (and only one) of the three names on the digital ballot,
you must not write in an additional name on the digital ballot (it is actually impossible to add another name in the dApp interface), and
you must not vote more then once from your crypto address,

Within this voting example, if a blockchain citizen doesn’t follow exactly the rules, which are enforced perfectly by the smart contract, they simply cannot participate in the act of voting.

For months, there has been a troubling issue gnawing at me related to this blogging project: while the mechanism of enforcement for a blockchain protocol institution is indeed exclusion from the protocol if you don’t follow it exactly (implying classification of a blockchain protocol institution as more like an *informal* institution), at the same time, the enforcement is 100% perfect and accurate every-time in its application; even, at the scale of millions or billions of people using a dApp (eg voting), not one rule-breaker can slip through the cracks and get away with breaking a rule or sub-rule, which actually feels a lot more like a *formal* institution in how it is enforced at such a consistent rate.

Yes, indeed, this is what has been gnawing at me: in a certain sense blockchain protocol institutions are very much formal in nature. This is to say, they are enforced perfectly, 100% of the time, even at the scale of million or billions of people or machines in a network practicing the use of the institution. There is also never any glitch in enforcement. The validators are always alert, active, and doing their duty, like an army of customs officers, probation officers, or police officers with their clipboards out, constantly on caffeine, and never falling asleep. And since they actually prevent any rules from being broken, ever, this means they enforce “proactively” and not “reactively” (as was done in the old world).

However, a BPI is different from a formal institution though too, it is actually neutrally-consistent in its enforcement, as in the old world there are ballot stuffing events that get intentionally overlooked, crooked police who hide wrongdoing, biases in judges brains that lead to wrongful sentencings, and so on.

This makes a blockchain protocol institution a very remarkable and new kind of “animal in the zoo” so to speak. It incorporates the much softer enforcement mechanism of an informal institution (ostracization or exclusion from the community / group practicing the protocol), but, it also incorporates the much harder element of extreme and iron-clad consistency of enforcement (by making it impossible to break the rule). In this regard, even for very minor crimes (eg. not defacing the ballot by adding a 4th name or not voting outside hours of 9-5pm) every rule and sub-rule is enforced to the letter of the law. In the old world, there are actually thousands of minor infractions of voting rules, which even with millions of volunteer elections officers cannot all be caught, and thus it is both expensive to run an old world election and in a closely contested election trust in the institution itself is regularly called into question, due to the impossible task of correctly and accurately enforcing all of the individual rules over a space of millions of voters.

For serious crimes like white collar fraud, murder, vandalism, enforcement via Rule of Law is uneven, and sometimes people commit crimes and simply do not get caught. Not with Rule of Code, people simply cannot break any rules.

Especially for traditions, norms, conventions, and other informal institutions in the pre-Web 3.0 era, these were enforced even more unevenly. Sometimes they would be enforced, and sometimes not at all. Especially if a group who creates an informal institution would grow to 100 members or beyond (eg America has 330m people now), enforcement by the act of ostracization from the group would be incredibly hit and miss as a means of enforcing the informal institution. This is why we needed informal institutions and Rule of Law in the first place, because enforcing informal institutions was so hit and miss, so unreliable, and there were horrible crimes & violence everywhere, all the time.

For example, take a simple convention like “thou shalt not spit in public”, but, unless a boy’s mother or family members are there watching him, he might spit while riding the train, and the people around him might frown, but he is not actually booted off of the train, and certainly he isn’t reported to police to be fined or jailed (unless he is a boy growing up in Singapore where this rule has in fact been formalized). Or, as a different example, if an Orthodox Jew doesn’t follow the Easter traditions, he’s unlikely to be shunned just for missing the traditions on the one single occasion.

Perhaps this is why sociologists and economists first used the label “informal” in their classification and typification of traditions, protocols, and conventions–it is because the enforcement happens in an informal, unreliable, and rather inconsistent way, and, it isn’t really formally policed. Indeed an informal institution exhibits informality in three ways: it is “informally” recorded (i.e. not written down), and, it has a softer form of “informal” enforcement via shunning from the group without any judgement published in a court register or formal proceeding, and, it is hit and miss in the efficacy of coverage of the enforcement (sometimes it is enforced, sometimes it isn’t).

In contrast, the hallmark of a formal institution is not only that it is written down on parchment paper (i.e. a legal code passed by the Congress) but also the formality or severity by which is the punishment is invoked (eg, jailings or fines backed by violence). Also, thirdly, the consistency by which the punishment is levied, i.e. theoretically for something like murder the institution should be enforced every single time a murder is committed. However, in most cases, the police are not present at the scene of the murder, and thus enforcement is a gray area and hit and miss even for formal institutions.

To a certain extent, a blockchain protocol institution is even more formal than an old-world formal institution, it is specified in computer code, it is enforced formally every single time, and the coverage of enforcement is 100%. The validators do not sleep. They do not need make mistakes. They are never lazy, biased, or on vacation.

The last point is to say, the validators enforcing the smart contract are always alert, always on guard, always doing their duty to let transactions, votes, decisions, social events to be approved only if they meet exactly the “letter of the protocol rules and sub-rules” as specified in the smart contract that the dApp is running on. Anyone failing to follow the rules is excluded from the protocol. It works 100% of the time like clockwork.

Thus, here is my new conclusion about how to properly classify blockchain protocol institutions:

they are a new class of institution, wholly different in kind, not exactly like the informal institutions that sociologists and economists have studied for 50 years, and not exactly like formal institutions either,
they are similar to informal institutions in the sense that enforcement happens through the mechanism of ostracization by the group (ie. exclusion from a protocol if rules not followed exactly) and not by formal fines/punishments (although in the case of slashing there is loss of a “bond”- maybe need to consider this more?),
they are similar to formal institutions in the sense that they are formally specified in written form and then enforcement is levied in a formalized and iron-clad way,
however, they are different from both formal and informal institutions of the older pre-Internet technology world, in the sense that the enforcement always happens perfectly, reliably, consistently, and dependably, 100% of the time, without fail,

Thus, we can say that blockchain protocol institutions are like a platypus, they are not mammal and not fowl, they are a new hybrid form, different in kind.

Blockchain protocols systems basically allow us to convert the mechanism of enforcement of the much softer breed of informal institutions (which could not be enforced consistently in the old world) into perfectly formalized institutions (enshrined in computer code) that are enforced 100% of the time like clockwork.

This might be one of the reasons that the leaders of the old world has such a hard time grappling with, comprehending , and coming to terms with the incredibly important innovation that blockchain and smart contracts represent: we truly are dealing with a new kind of platypus, and we do not have any prior context for it in our brains or our social / legal / political / regulatory realms.

Basically, we are creating a totally new “social technology for establishing order in humanity. It is not different in degree, it is different in kind, and it can be used for enforcing social contracts and delivery of public goods in the digital economy at huge scale. This is perhaps why nobody with formal education properly understands what it is, how it is important, or what it is good for?

If we can get more clarity around that it is, and what it is good for, as opposed to just using it for ICOs and token pumps — which all of the VCs are to blame for fanning the flames on imo — then we can start to harness it for fixing real problems in the world.

Now, an important caveat: Rule of Code cannot work in the meat space, it cannot prevent boys from spitting or Orthadox Jews from breaking Easter traditions. But it can enforce all manner of rules related to social compacts, social contracts, and, naturally, provisioning of public goods which is a special kind of social contract (this includes the entire space of money, finance, banking, lending, insurance, pension, and public goods (once we get better contractor management platforms).

There is absolutely no question that the BPI can be a tour de force in the institutional builders tool kit, an incredibly useful, powerful, and amazing “social technology” invention for the ordering of human behavior in social, economic, and political systems.

Enforcement of social compacts consistently leads to trust. Trust leads to flow. And flow leads to human productivity and wealth creation.

By the way, for those that haven’t read my earlier work, Doug North made the discovery that 80% of the variation in wealth (i.e. GDP per capita) across all countries around the world over the past 200 years can be explained by one variable and one variable alone: presence of effective Rule of Law.

All of those other variables that the World Bank tracks, yeah, they don’t really matter all that much.

So just think about that. If Rule of Code provides a cheaper and more efficient system for enforcing social contracts than Rule of Law, and if this system can work for everyone in the world, and if we can use it to provision public goods too, then this might actually in fact be the most important invention of our Century? Do you see that, too?

Am I going crazy?

Is challenging the last 600 years of how we do things insane?

Please someone tell me I’m not going mad.

Informal institutions grown on decentralized state machines

As we discussed in the prior post, institutions are constraints on human behavior established within human groups as operating rules about what is allowed and disallowed within the group. Shared beliefs about these rules and their interpretation are a precursor to making institutions work in society.

For this post, we shall use the term Decentralized State Machine as opposed to the term blockchain, in the same spirit as it has been used over the past several years by Cosmos founder Ethan Buckman, to define networks of computerized validators consisting of both CPU and memory that run a software client and apply consensus rules to keep a decentralized and shared log of transactions, votes, and social events carried out by members of the network (i.e. signed by their private keys).

Ethan Buckman talking about sovereign communities built on Decentralized State Machines.

Now, let’s take all that we’ve learned about Institutions from the prior post, and apply this lens of analysis to how we might possibly carry humanity forward with a new social, political, and economic order fashioned predominantly from informal institutions maintained by Decentralized State Machine networks.

While I have been big believer in the American system, and the framework that it has provided over the past 245 years to unleash human prosperity, I am writing this blog because I believe we now have the tools to do substantially better as a human species!

The key insight is that it has now become possible to establish a whole new family or class of informal institutions grown on top of Decentralized State Machines to deliver social, political, and economic order within local communities and at scale. Early examples of such informal institutions are now emerging and becoming tangible within many blockchain and cryptocurrency projects, and serve as proof of concept.

Want to learn more about this crazy ‘fever dream’ that I can foresee in my mind’s eye?

Here we go!

First, we make two simple observations:

Decentralized State Machines are record-keeping systems w/ capacity to maintain perfect socially-agreed accounts of social, political, and economic events. Saying this in another way, all of the nodes in a network that support a Decentralized State Machine maintain an exact-copy of the record of history of transactions, votes, and social events between members of that network, and since all of this record-keeping is public and subject to consensus rules, there is zero-discrepancy about the true history of events for any member of the community who is participating. Thus, a Decentralized State Machine is a perfect system for maintaining shared beliefs and a single record of truth about history for any community engaging in joint economic activity, decision-making, political-fact keeping, and social-fact keeping. In other words, even the the most forgetful, self-interested, or confused member of a community cannot dispute the record of facts in a socially-credible fashion if those facts have been recorded via a Decentralized State Machine network.
Decentralized State Machines make it possible to enact new kinds of informal institutions within huge communities of both humans and machines at massive societal scale at very low cost. For all of you blockchain builders: A new decentralized protocol programmed in a smart contract and accessible via a dApp is really a new kind of informal institution, as per the definition of the term ‘informal institution’ provided in the prior post. These new kinds of informal institutions can have myriad purposes and interaction points for human and machine users, and each interaction must follow the rules of the protocol and be signed by the users private key (we will discuss this more in the next post). In this sense, the protocol enforces the desired behavior and creates order or routine behavior within the community of users of the protocol. If a person or machine doesn’t follow the rules of a particular protocol, they simply cannot participate. They are effectively ostracized or banished from the group that is repeating the actions of the protocol and gaining its benefits.

For example, if a person doesn’t like the fact that Bitcoin transactions are irreversible and they don’t want to use the protocol, no one is making them join it. But if Bitcoin becomes dominant in society, and a small hold-out of people refuse to use it, or if they refuse to follow the protocol exactly as designed, then those individuals become unable to access the benefits of the protocol, and they are effectively banished and may not gain in the wealth creating associated with a society booting-up a new form of money. (in this regard, Peter Schiff sits outside of the Bitcoin protocol, and he will remain in this banished condition, until he gets with the ‘shared beliefs’ and starts to accept and follow the protocol rules).

Now, connecting observation 1 and 2 together, since all of the events within a community that builds its social, economic, or political activities on top of a network of Decentralized State Machines are perfectly recorded via a system of maintaining shared beliefs, without any possibility for social disagreement about the facts, and since blockchain protocols can be used to program voluntarily-accepted constraints on both human and machine behavior in terms of what that community of humans and machines can do relative to the protocol, thus a Decentralized State Machine is the ultimate substrate layer for creating new kinds of informal institutions, to underpin new kinds of social, political, and economic arrangements in humanity. (read: it becomes possible to create a whole new basis of order in society, polity, and economy relying on informal institutions and not so much on formal institutions, nor on the premise of violence on which formal institutions are enforced. This is because informal institutions DO NOT REQUIRE formal punishments, ie. there is no need for a police-state with fines, jailings, and electrocutions!)

The key insight here, as we move from Humanity 2.0 to Humanity 3.0 institutional arrangements, is that we are shifting the basis of “order” from formal institutions that were maintained by the nation-state with enforcement via violence and draconian limitations on personal freedoms, to informal institutions maintained by voluntary protocol societies with enforcement via loss of access.

A corollary insight: When we are in the realm of informal protocols, deviation from the protocol whether intentional or accidental, basically becomes synonymous with lack of access, or being fenced out, or in the language of institutional theory, ostracization or banishment from the protocol. In other words, if you don’t follow the protocol, you lose privilege of its benefits!

Please pause and think about this for a few moments: This link between Decentralized State Machines and Informal Institutions has wildly exciting potential for the organization of all of humanity! There may be a pathway that has opened up to our species, made available by harnessing this new Decentralized State Machine technology to create informal institutions, that allows us to replace the political and economic arrangements of the nation-state (which rely on formal institutions and enforcement by violence) with a new system that relies on informal institutions as a primary basis for societal order!

Here is the big idea: If we can build new kinds of informal institutions to replace — and re-factor and re-do even better –the formal institutions responsible over the last century for the delivery of public records, money markets, property rights, governance systems, professional credentialing bodies, scales of justice, other kinds of public goods, and so on and so forth, then we can build a new kind of Humanity 3.0 not premised on violence, and create a much better future for our species.

Another insight from economic historian Douglass North: history is path dependent. So, where you end up in any institution-building project is very much dependent on the philosophical underpinnings and where you start! So, if your entire system is premised on violence as a core starting-out assumption, probably that isn’t going to take you to very good places as a human species! I believe America now has a greater number of people locked up in cages out of any species in all of human civilization. I believe we can fix this now, with a system pinned on new starting assumptions.

Perhaps we can use Decentralized State Machines as a foundation for a parallel system built entirely on informal institutions, and slowly transition as a species away from the violence-underpinned system, and slowly create a new set of informal institutions to deliver governance systems, financial markets, and so on to support humanity running at scale, without needing for it to be ordered by the heavy cudgel of violence.

We know from institutional theory that informal institutions can be just as powerful and as useful for ordering human behavior as are formal institutions. In many respects, they are more persistent and enduring, as we have learned from the example of informal institutions in Russia outliving the implementation of both the communist and capitalist formal institutions.

The problem with them, is that it was difficult to enforce them at massive scale, due to the informal nature of enforcement. However, this has been solved now, with informal institutions enforced by networks of Decentralized State Machines.

In many respects, the birth of the nation-state was only possible with the advent of parchment paper, and the writing of rules, codes, and punishments with a quill pen down on the parchment paper, e.g. Hammurabi’s code, British common law, French Napoleonic law. The shared set of beliefs about crimes and requisite punishments recorded on ink on the parchment paper could be copied hundreds of times, could be replicated in libraries, and could became the basis of enforcing a consistent formal order. Thus, you can say that the quill pen and parchment paper were the technological precursors to formal rule of law systems as a basis of human order. Prior to the quill pen and parchment paper, the ordering of humanity was done through family clans and village councils mostly using informal institutions, i.e. if the village turned against you you were banished and needed to hunt and gather on your own as an excile.

Now, with the emergence of Decentralized State Machines as a new technology for implementing informal institutions, we could see a renaissance in ‘societal order building activities’ based entirely upon the informal institutional model, but in a much more sophisticated way.

The great thing about a network of Decentralize State Machines is that it is like a “clipboard army” of neutral, third-party observers to do “fact checking, certifying, auditing, and rule verifiying” for every event that is logged into a protocol. If it is a business protocol, then business rules can be enforced within a network (eg. see work being pursued at Chronicled). If it is a democracy protocol, then voting rules can be enforced within a network (eg. see everything happening within Polkadot, Cosmos, Decred, and Tezos).

For example, if the network encompasses a million people, and they all vote once during an important election, then the invisible clipboard army that is built-into that network is performing the function of a million third-party certifications that the votes were recorded correctly according to the rules. For example, rules might include that:

every single eligible vote must be for one of the three candidates,
the vote must be recorded during the proper window of time, and
an account on the network must not vote more than one time.

Although simple, the costs of enforcing these three rules over a million people is non-trivial in a world of paper and pens, or, even in a world of desktops and central databases. Prior to decentralized consensus systems, the transaction costs of doing one million third-party verifications to certify adherence to the voting protocol was extremely cost-prohibitive. Now, it is virtually costless with dApps running on Decentralized State Machines and reliable enforcement of dApp accessible via network protocols.

In the Humanity 2.0 era, most of the important institutions that you and I and every other citizen of the nation-state encountered were formal institutions, passed by the Congress, and these formal institutions were the backbone of the entire American system. Indeed, when there was failure to comply with a formal institution, to make the American system work, it was necessary to institute jail or fines as punishment, backed by the monopoly on violence carried by the State. Of course, there were informal institutions scattered throughout the system, but somehow they were of secondary importance to the formal institutions in terms of the functioning of the system.

In the humanity 3.0 era, there will be much greater centrality placed on informal institutions, as network protocols can be used as a new substrate layer to boot-up money, run democratic processes to choose representation, deliver public goods, gain credentials, and access the scales of justice. Thus, informal institutions will emerge as the backbone of the new voluntary Libertarian system, and formal institutions will become a lot less central.

As this new order emerges, banishment from the networks — and loss of access to opportunities for creating wealth, gaining credentials, and developing reputation — will become the worst form of punishment that could be imagined within this new order.

Given that decentralized blockchain networks will increasingly become a source of important public goods and services that human beings depend upon for liberty, freedom, and happy livelihoods, human beings will generally become considerably more careful about not to be banished from these important networks, and in a sense banishment will become worse then doing jail time as we approach the 22nd century and this new social order built upon informal institutions fully unfolds.

Many economic historians have justified the violence present in the nation-state model, as something that is inevitable if you are going to create order in society, and thus they have accepted this premise of violence using an ‘ends justifies the means’ argument. However, one can only argue that the ends justifies the means if there is no better means available to achieving those same ends. As soon as the technology frontier evolves such that the formal institutional means built on violence can indeed be replaced with something better, then isn’t it a moral obligation as a human species to re-build better on the new foundations? If we can do successfully, the sustainability of humanity on planet earth and the citadels that we can climb to as a human species can be vastly improved, imho.

Agenda for the next few months

In order to flesh out the Humanity 3.0 roadmap, I would like to blog about the following topics over the next few months.

Most likely my blogging will not follow the ordering of topics presented below, nevertheless, having a list of the topics and how they fit together is useful as we get started.

A. Foundational Topics

(i) What are institutions? The blockchain community needs to understand this concept of “institutions” much better, including how both “formal institutions” (e.g. rules) and “informal institutions” (e.g. norms, protocols) are sub-classes of the institutions that create and sustain social, economic, and political order. Institutional theory provides a very powerful and elegant toolkit for our purposes of re-thinking how human society, economy, and polity runs, and it will be foundational to all of my writing within the Humanity 3.0 blog and our discussions together.

(ii) Ethan Buckman’s vision for the Cosmos Network of Networks of Decentralized State Machines – in many respects, my vision for Humanity 3.0 institutions builds squarely on top of Ethan’s technical vision for a network of decentralized state machines; there are other ways we could introduce the technical blockchain layer, but, Ethan’s framing of the basic problem of living organisms communicating and transacting with one another requiring the keeping of ‘shared state’ and the solution to accomplishing this in a human societal context being a decentralized, byzantine fault tolerant, network of state machines is a particularly useful leaping off point.

(iii) Public/Private Key Pairs, Wallet Connect, and Web 3.0 – how Bitcoin was a trojan horse to introducing mainstream society to the act of using a public/private key pair to sign transactions, votes, and other community-verifiable events in a secure, immutable, and near-frictionless manner. How it is a huge leap forward that every web page on the Internet can now be frictionlessly connected to a blockchain wallet so that users of that website can sign transactions, votes, and community-verifiable events.

(iv) The Genesis of a Blockchain Community, The Role of the Founders, The Community Fund, The Community Roadmap, and the Hiring of Contractors to Build-out the Roadmap – the nuts and bolts of a community-driven project to deliver public goods.

(v) The Principle of Incrementalism – how and why blockchain ecosystems can be set-up to “incrementally evolve” into winning institutional arrangements for humanity over the long-run based on experimentation and empirical experience within a community. Similarities to how the U.S. system evolved over many, many cycles of legislation, case law, and adaptations by the Congress as mistakes were made and adjustments were needed.

B. State of the Union: Progress to Date in the Larger Blockchain Space

Over the past 10 years, the global community of blockchain and cryptocurrency technologists has successfully built:

(i) decentralized identities – we now have millions of people using public-private key pairs, and as a consequence of pressure from regulators, KYC of real-world identities against their on-chain identities.

(ii) decentralized money – we now have millions of people transacting in cryptocurrencies.

(iii) decentralized infrastructure – we now have 100s of networks with 100s of decentralized validators (e.g. miners, farmers) per network and a whole industry of decentralized validation services that is global and empowered.

While it is too early declare victory in the following areas, progress is also being made rapidly via hundreds of independent projects:

(i) finance, insurance & financial markets – financial system, lending, financial markets, insurance pools, oracles; discussion of how blockchains will do the institutions of banking, insurance, and financial markets better than was possible under the Humanity 2.0 institutional order – big topic, but in many ways also the most developed area within blockchain, so there are dozens of examples to choose from. The commercial-banking system did a lousy job in extending credit (due to problems of greed and laziness), and new protocols for lending could entirely replace the function of the commercial-banking system over the next decade.

(ii) new governance models – representation, liquid democracy, DAOs; discussion of Politeia, Cosmos Station, and Terra Station as clients for community-based voting on community-generated proposals; discussion of Polkadot’s progress and the concepts of liquid democracy, delegation, and proxy accounts.

(iii) taxation & community treasury – every transaction taxed (like VAT), tax can be increased in bad times, community funds, rainy day funds, 100% transparent & public (no secrecy like we have at the Fed today); discussion of the Decred, Terra, and Tezos community fund models.

C. Still to Come: Roadmap of Sorts

(i) how we do public records? births / deaths, marriages, land title, rulings of the justice system; discussion of public records maintained historically by centralized governments, discussion of the open syntax for public records being created on FileCoin, and why doing public records on blockchain will be better.

(ii) how we create democratically-elected councils of representatives to lead and oversee important public good projects – how do we hook-up liquid democracy, delegations of voting power to a trusted representative, penalties for failing to delegate or participate directly in community voting, sub-protocol for recognizing a change to the slate of representatives when the community at-large undelegates one custodian in favor of another, possibly also a process for granting the current slate of representatives multisig keys (and revoking those keys if a delegate loses support). Imho, multisig-based sign-off by trusted delegates within a community is generally needed in order to create something like a justice system or for oversight of contractor payment milestones. 100% DAO-based systems without human overseers in-the-loop are unlikely to succeed in delivering complex programs in arenas such as healthcare and defense.

(iii) how we do property rights? private property registries (e.g. buildings, cars, and swaps of cryptocurrency for physical assets), public property (e.g. WeWork type arrangements w/ tokenized ownership and community access to distributed buildings all over the world), community property (e.g. shared possessions like the Native Americans & Samoans); discussion of the experience at Chronicled and Agoric with on-chain asset registration and swaps of physical assets for cryptocurrency; discussion of why blockchain societies will not own one large, contiguous piece of land like America or England, but why they will end up aggregating many pieces of land all around the world in the true spirit of digital cooperatives led by digital nomads who are working towards a new voluntary global order, ultimately finding and creating safe zones with contractors providing defense to protect against persecution by the police and militaries of nation-states.

(iv) how we can eventually do local government, schools, hospitals, police, and public works? this can build on the community treasury, community proposals, and contractors model that we already have working relatively well in many of the ecosystems, so the leap may seem less far than at first you might imagine. Discussion of cooperatives.

(v) how we can do credentialing better on blockchain? licenses to drive an automobile, practice medicine, certify financial statements, and design structurally-engineered buildings and bridges, so that members of the community can be safe, and protocols to revoke credentials when trust is breeched (perhaps connected to justice system overrides). Apart from a few university’s issuing diplomas on-chain, there’s little to no progress in this area to date. Huge white space for builders.

(v) how we do an on-chain system of justice? another huge whitespace for blockchain entrepreneurs, there has been little experimentation with creating systems of justice juxtaposed with multi-sig based reversals of on-chain transactions, property rights, credentials, and so forth. Polkadot could be the place where these experiments first happen as liquid democracy, multi-sig, and proxy votes are all out of the box on Parity Substrate. To discuss: lower courts: perhaps a system of tribunals, say, 2 of 3 or 3 of 5 key multi-sig to override on-chain transactions, Appeals Courts and Supreme Court: democratically elected, say, 5 of 7 or 7 of 9 key multi-sig to override on-chain transactions; could also be a system that publishes judgements of guilt or innocence and pulls up short of charging decisions, no incarcerations, the idea if people have knowledge about another person’s history of dangerous, unlawful, or violent actions then they can react to defend themselves when around that person, or the person can be banished from the ecosystem, but no one needs to be thrown into a prison. Mobile phones can now make instantaneous access to information about millions of people possible.

D. Putting it All Together with Humanity 3.0

(i) How we can run society on blockchain better than was possible with nation states. Reducing the transaction costs of democratic elections and administering public good and service projects. Making it all voluntary. Why this matters in parts of the world where dysfunctional governments, lawlessness, and the institutions of Humanity 1.0 are currently the norm, i.e. how we can rapidly progress human development, prosperity, and progress on top of this new technology layer worldwide by leapfrogging the need for Humanity 2.0 institutions altogether.

(ii) dApps for the Commons: A Huge White Space Opportunity – The enormous potential of a vast array of new community-based, network-governance supported societal common good projects. I envision each member participating voluntarily in 10 or 20 communities that they care about on their mobile device, paying $1 or $10 per month with a streaming subscription fee model out of their pay, and hundreds of millions of people per community in the more successful communities! We can access these new public services via dApps on our mobile phones. All voluntary! I can’t wait to browse through this “public good dApp store” 20 years from now!

(iii) The Great Transition from Humanity 2.0 to Humanity 3.0 – How the transition from the current Nation-State humanity 2.0 model to the new Libertarian-Blockchain Humanity 3.0 Model will unfold over coming decades. Starts as a totally parallel system…. won’t be a scary transition, as every single community is both voluntary and opt-out. Flags will prevail, we will all wear the t-shirts of the networks and communities we care most about!