Blockchain and Democracy


Literature Review by Jörn Erbguth: “Democratic states are entities where issues are decided by a large group – the people. There is a democratic process that builds upon elections, a legislative procedure, judicial review and separation of powers by checks and balances. Blockchains rely on decentralization, meaning they rely on a large group of participants as well. Blockchains are therefore confronted with similar problems. Even further, blockchains try to avoid central coordinating authorities.

Consensus methods ensure that the systems align with the majority of their participants. Above the layer of the consensus method, blockchain governance coordinates decisions about software updates, bugfixes and possibly other interventions. What are the strengths and weaknesses of this blockchain governance?
Should we use blockchain to secure e-voting? Blockchain governance has two central aspects. First, it is decentralized governance based on a large group of people, which resembles democratic decision-making. Second, it is algorithmic decision-making and limits unwanted human intervention

Cornerstones
Blockchain and democracy can be split into three areas:

First, the use of democratic principles in order to make blockchain work. This ranges from the basic concensus algorithm to the (self-)governance of a blockchain.

Second, blockchain is seen as providing a reliable tool for democracy. This ranges from the use of blockchain for electronic voting to the use in administration.

Third, to study possible impacts of blockchain technology on a democratic society. This focusses on regulatory and legal aspects as well as ethical aspects….(More)”

The New York Times thinks a blockchain could help stamp out fake news


MIT Technology Review: “Blockchain technology is at the core of a new research project the New York Times has launched, aimed at making “the origins of journalistic content clearer to [its] audience.”

The news: The Times has launched what it calls The News Provenance Project, which will experiment with ways to combat misinformation in the news media. The first project will focus on using a blockchain—specifically a platform designed by IBM—to prove that photos are authentic.

Blockchain? Really? Rumors and speculation swirled in March, after CoinDesk reported that the New York Times was looking for someone to help it develop a “blockchain-based proof-of-concept for news publishers.” Though the newspaper removed the job posting after the article came out, apparently it was serious. In a new blog post, project lead Sasha Koren explains that by using a blockchain, “we might in theory provide audiences with a way to determine the source of a photo, or whether it had been edited after it was published.”

Unfulfilled promise: Using a blockchain to prove the authenticity of journalistic content has long been considered a potential application of the technology, but attempts to do it so far haven’t gotten much traction. If the New York Times can develop a compelling application, it has enough influence to change that….(More)”.

Blockchain and Public Record Keeping: Of Temples, Prisons, and the (Re)Configuration of Power


Paper by Victoria L. Lemieux: “This paper discusses blockchain technology as a public record keeping system, linking record keeping to power of authority, veneration (temples), and control (prisons) that configure and reconfigure social, economic, and political relations. It discusses blockchain technology as being constructed as a mechanism to counter institutions and social actors that currently hold power, but whom are nowadays often viewed with mistrust. It explores claims for blockchain as a record keeping force of resistance to those powers using an archival theoretic analytic lens. The paper evaluates claims that blockchain technology can support the creation and preservation of trustworthy records able to serve as alternative sources of evidence of rights, entitlements and actions with the potential to unseat the institutional power of the nation-state….(More)”.

The “Tokenization” of the eParticipation in Public Governance: An Opportunity to Hack Democracy


Chapter by Francisco Luis Benítez Martínez, María Visitación Hurtado Torres and Esteban Romero Frías: “Currently Distributed Ledger Technologies-DLTs, and especially the Blockchain technology, are an excellent opportunity for public institutions to transform the channels of citizen participation and reinvigorate democratic processes. These technologies permit the simplification of processes and make it possible to safely and securely manage the data stored in its records. This guarantees the transmission and public transparency of information, and thus leads to the development of a new citizen governance model by using technology such as a BaaS (Blockchain as a Service) platform. G-Cloud solutions would facilitate a faster deployment in the cities and provide scalability to foster the creation of Smart Citizens within the philosophy of Open Government. The development of an eParticipation model that can configure a tokenizable system of the actions and processes that citizens currently exercise in democratic environments is an opportunity to guarantee greater participation and thus manage more effective local democratic spaces. Therefore, a Blockchain solution in eDemocracy platforms is an exciting new opportunity to claim a new pattern of management amongst the agents that participate in the public sphere….(More)”.

The Blockchain Game: A great new tool for your classroom


IBM Blockchain Blog: “Blockchain technology can be a game-changer for accounting, supply chainbanking, contract law, and many other fields. But it will only be useful if lots and lots of non-technical managers and leaders trust and adopt it. And right now, just understanding what blockchain is, can be difficult to understand even for the brightest in these fields. Enter The Blockchain Game, a hands-on exercise that explains blockchain’s core principals, and serves as a launching pad for discussion of blockchain’s real-world applications.

In The Blockchain Game students act as nodes and miners on a blockchain network for storing student grades at a university. Participants record the grade and course information, and then “build the block” by calculating a unique identifier (a hash) to secure the grade ledger, and miners get rewarded for their work. As the game is played, the audience learns about hashes, private keys, and what uses are appropriate for a blockchain ledger.

Basics of the Game

  • A hands-on simulation centering around a blockchain for academic scores, including a discussion at the end of the simulation regarding if storing grades would be a good application for blockchain.
  • No computers. Participants are the computors and calculate blocks.
  • The game seeks to teach core concepts about a distributed ledger but can be modified to whichever use case the educator wishes to use — smart contracts, supply chain, applications and others.
  • Additional elements can be added if instructors want to facilitate the game on a computer….(More)”.

Unblocking the Bottlenecks and Making the Global Supply Chain Transparent: How Blockchain Technology Can Update Global Trade


Paper by Hanna C Norberg: “Blockchain technology is still in its infancy, but already it has begun to revolutionize global trade. Its lure is irresistible because of the simplicity with which it can replace the standard methods of documentation, smooth out logistics, increase transparency, speed up transactions, and ameliorate the planning and tracking of trade.

Blockchain essentially provides the supply chain with an unalterable ledger of verified transactions, and thus enables trust every step of the way through the trade process. Every stakeholder involved in that process – from producer to warehouse worker to shipper to financial institution to recipient at the final destination – can trust that the information contained in that indelible ledger is accurate. Fraud will no longer be an issue, middlemen can be eliminated, shipments tracked, quality control maintained to highest standards and consumers can make decisions based on more than the price. Blockchain dramatically reduces the amount of paperwork involved, along with the myriad of agents typically involved in the process, all of this resulting in soaring efficiencies. Making the most of this new technology, however, requires solid policy. Most people have only a vague idea of what blockchain is. There needs to be a basic understanding of what blockchain can and can’t do, and how it works in the economy and in trade. Once they become familiar with the technology, policy-makers must move on to thinking about what technological issues could be mitigated, solved or improved.

Governments need to explore blockchain’s potential through its use in public-sector projects that demonstrate its workings, its potential and its inevitable limitations. Although blockchain is not nearly as evolved now as the internet was in 2005, co-operation among all stakeholders on issues like taxonomy or policy guides on basic principles is crucial. Those stakeholders include government, industry, academia and civil society. All this must be done while keeping in mind the global nature of blockchain and that blockchain regulations need to be made in synch with regulations on other issues are adjacent to the technology, such as electronic signatures. However, work can be done in the global arena through international initiatives and organizations such as the ISO….(More)”.

Blockchain and distributed ledger technologies in the humanitarian sector


Report by Giulio Coppi and Larissa Fast at ODI (Overseas Development Institute): “Blockchain and the wider category of distributed ledger technologies (DLTs) promise a more transparent, accountable, efficient and secure way of exchanging decentralised stores of information that are independently updated, automatically replicated and immutable. The key components of DLTs include shared recordkeeping, multi-party consensus, independent validation, tamper evidence and tamper resistance.

Building on these claims, proponents suggest DLTs can address common problems of non-profit organisations and NGOs, such as transparency, efficiency, scale and sustainability. Current humanitarian uses of DLT, illustrated in this report, include financial inclusion, land titling, remittances, improving the transparency of donations, reducing fraud, tracking support to beneficiaries from multiple sources, transforming governance systems, micro-insurance, cross-border transfers, cash programming, grant management and organisational governance.

This report, commissioned by the Global Alliance for Humanitarian Innovation (GAHI), examines current DLT uses by the humanitarian sector to outline lessons for the project, policy and system levels. It offers recommendations to address the challenges that must be overcome before DLTs can be ethically, safely, appropriately and effectively scaled in humanitarian contexts….(More)”.

You Do Not Need Blockchain: Eight Popular Use Cases And Why They Do Not Work


Blog Post by Ivan Ivanitskiy: “People are resorting to blockchain for all kinds of reasons these days. Ever since I started doing smart contract security audits in mid-2017, I’ve seen it all. A special category of cases is ‘blockchain use’ that seems logical and beneficial, but actually contains a problem that then spreads from one startup to another. I am going to give some examples of such problems and ineffective solutions so that you (developer/customer/investor) know what to do when somebody offers you to use blockchain this way.

1. Supply chain management

Let’s say you ordered some goods, and a carrier guarantees to maintain certain transportation conditions, such as keeping your goods cold. A proposed solution is to install a sensor in a truck that will monitor fridge temperature and regularly transmit the data to the blockchain. This way, you can make sure that the promised conditions are met along the entire route.

The problem here is not blockchain, but rather sensor, related. Being part of the physical world, the sensor is easy to fool. For example, a malicious carrier might only cool down a small fridge inside the truck in which they put the sensor, while leaving the goods in the non-refrigerated section of the truck to save costs.

I would describe this problem as:

Blockchain is not Internet of Things (IOT).

We will return to this statement a few more times. Even though blockchain does not allow for modification of data, it cannot ensure such data is correct.The only exception is on-chain transactions, when the system does not need the real world, with all necessary information already being within the blockchain, thus allowing the system to verify data (e.g. that an address has enough funds to proceed with a transaction).

Applications that submit information to a blockchain from the outside are called “oracles” (see article ‘Oracles, or Why Smart Contracts Haven’t Changed the World Yet?’ by Alexander Drygin). Until a solution to the problem with oracles is found, any attempt at blockchain-based supply chain management, like the case above, is as pointless as trying to design a plane without first developing a reliable engine.

I borrowed the fridge case from the article ‘Do you Need Blockchain’ by Karl Wüst and Arthur Gervais. I highly recommend reading this article and paying particular attention to the following diagram:

2. Object authenticity guarantee

Even though this case is similar to the previous one, I would like to single it out as it is presented in a different wrapper.

Say we make unique and expensive goods, such as watches, wines, or cars. We want our customers to be absolutely sure they are buying something made by us, so we link our wine bottle to a token supported by blockchain and put a QR code on it. Now, every step of the way (from manufacturer, to carrier, to store, to customer) is confirmed by a separate blockchain transaction and the customer can track their bottle online.

However, this system is vulnerable to a very simple threat: a dishonest seller can make a copy of a real bottle with a token, fill it with wine of lower quality, and either steal your expensive wine or sell it to someone who does not care about tokens. Why is it so easy? That’s right! Because…(More)”

Smart Contracts and Their Identity Crisis


Paper by Alvaro Gonzalez Rivas, Mariya Tsyganova and Eliza Mik: “Many expect Smart Contracts (SC’s) to disrupt the way contracts are done implying that SC have the potential to affect all commercial relationships. SC’s are automatization tools; therefore, proponents claim that SC’s can reduce transaction costs through disintermediation and risk reduction.

This is an over-simplification of the role of relationships, contract law, and risk. We believe there is a gap in the understanding of the capabilities of SC’s. With that in mind we seek to define an amorphous term and clarify the capabilities of SC’s, intending to facilitate future SC research. We’ve examined the legal, technical, and IS views from an academic and practitioner’s perspective. We conclude that SC’s have taken many forms, becoming a suitcase word for any sort of code stored on a blockchain, including the embodiment of contractual terms; and that the immutable nature of SC’s is a barrier to their adoption in uncertain and multi-contextual environments….(More)”.

Blockchain Economics


NBER Working Paper by Joseph Abadi and Markus Brunnermeier: “When is record-keeping better arranged through a blockchain than through a traditional centralized intermediary? The ideal qualities of any record-keeping system are (i) correctness, (ii) decentralization, and (iii) cost efficiency. We point out a blockchain trilemma: no ledger can satisfy all three properties simultaneously.

A centralized record-keeper extracts rents due to its monopoly on the ledger. Its franchise value dynamically incentivizes correct reporting. Blockchains drive down rents by allowing for free entry of record-keepers and portability of information to competing “forks.” Blockchains must, therefore, provide static incentives for correctness through computationally expensive proof-of-work algorithms and permit record-keepers to roll back history in order to undo fraudulent reports. While blockchains can keep track of ownership transfers, enforcement of possession rights is often better complemented by centralized record-keeping….(More)”