Yahoo Finance Experiments in Crypto’s Governance Lab
Two hundred and thirty-three years ago, a group gathered in Philadelphia. Fifty-five men entered the red brick Pennsylvania state house, shuttered the windows and embarked upon a rare sort of work: defining how they would govern and be governed. For 100 days they debated, compromised, drafted, edited, and debated some more. In the end, on Sept. 17, 1787, they emerged with the United States Constitution.
It is worth noting this was not the first attempt. The gathering in 1787 was first initiated with the intention of revising the Articles of Confederation, America’s first constitution that had been ratified six years prior. That constitution, however, was proving weak and lacking the teeth necessary for enforcement. As the Constitutional Convention kicked off, the conversation quickly turned from revising the old articles to scrapping them and starting over.
This post is part of CoinDesk’s 2020 Year in Review – a collection of op-eds, essays and interviews about the year in crypto and beyond. Jill Carlson, a CoinDesk columnist, is co-founder of the Open Money Initiative, a non-profit research organization working to guarantee the right to a free and open financial system. She is also an investor in early-stage startups with Slow Ventures.
Related: Mr. Curious
It is difficult to overstate how painstaking this process was. Discussions turned into arguments and threatened to derail the work. Contention and fierce debate surrounded wide-ranging issues: the formation of the branches of government, what rights states would retain, how many delegates would represent each state, the legality of slavery and whether slaves would be represented, with whom veto power would lie, how monetary policy would be decided, who would have power over the treasury. The pressure was on to get to a constitution that all could agree to and that would work and endure for the centuries to come.
As the delegates in attendance were working on the final product, the oldest statesman there stood and gave a speech: “For when you assemble a Number of Men to have the Advantage of their joint Wisdom, you inevitably assemble with those Men all their Prejudices, their Passions, their Errors of Opinion, their local Interests, and their selfish Views. From such an Assembly can a perfect Production be expected?”
Benjamin Franklin, here, acknowledges the document’s imperfections and notes the fallibility of its framers. He captures the impossible difficulty of the task they have undertaken. Yet, he turns this perspective to optimism, ultimately supporting the Constitution and saying it is as close to perfect as anyone could achieve.
If you can keep it
Franklin, upon walking out of Independence Hall following the convention, is said to have uttered another truth about the outcome of the delegates’ work.
Related: Crypto Is a Low-Risk, High-Reward Career Move These Days
“What have we got? A republic or a monarchy?” called out a member of the crowd around the building.
“A republic, if you can keep it,” replied Franklin.
The framing of the constitution is worth revisiting as we close out 2020, this annus horribilis that has seen a presidential impeachment, a deadly pandemic, an economic shutdown, unprecedented unemployment, civil unrest, a national reckoning around inequality and race relations, the loss of a Supreme Court Justice and, finally, the defeat of a presidential incumbent. Given this context, it feels more notable than ever that we have in fact kept our republic intact.
See also: Money Reimagined Podcast – A Battle for Bitcoin’s Soul, With Jill Carlson and Raoul Pal
Amid all of the chaos, corruption and change, the basic framework of our government has persisted. We can debate about whether the individuals who hold the highest offices of the land are adequately and appropriately serving their constituents. But what is without doubt is the offices themselves and the protocols surrounding them have remained largely unmolested despite the personalities that have inhabited them over the centuries and despite the turmoil the country has experienced in the intervening years. Credit to those 55 framers.
The library and the laboratory
Earlier, I described the work of the framers as rare. Part of what created pressure on them was that it is rare for humans to experiment with governance. Such experimentation has almost always been prohibitively costly. The opportunities to do such experimentation follow wars, coups, and revolutions. The timing cannot be controlled and the consequences cannot be fully considered. These moments in history, on the occasions they arise, have demanded quick action to plug power vacuums, leaving little time or space for reflection and deliberation.
The cost and infrequency of opportunities to explore new models of governance has meant that most innovation in this space has historically happened among academics and philosophers, from the security of the library or the smoke-filled salon. Much progress is attributable to these thinkers. The main tenets of the Constitution grew out of the theories of Enlightenment philosophers: Locke, Rousseau, Voltaire, Paine. They pioneered fresh perspectives on individual liberties, religious freedoms, democracy and inalienable rights.
See also: Government Reimagined, With Michael Casey, Sheila Warren, Jeff Saviano and Glen Weyl
For centuries these have been the two options for working on governance: in the library or in the high-stakes aftermath of regime change when a country’s fate, and that of its citizens, is on the line. Never has there been a laboratory within which experimentation could occur.
Governance experiments
2020 has seen the emergence of governance laboratories at scale for the first time in history. Never before have we, at scale, been able to experiment with how decisions get made within a community or a collective and see the ramifications in real-time. Cryptocurrency protocols offer us this: a middle ground between the ivory tower and the riots in the streets. We now have a low-stakes (but not no-stakes) way to test and assess how we govern.
There have been many trends in the cryptocurrency space this past year. Decentralized finance has reached escape velocity, with projects attracting meaningful traction and liquidity. Stablecoins are exploding in use and volumes. Central bank digital currencies are being taken seriously by every major player in the world. Bitcoin has finally cemented its position as digital gold and is rapidly earning the price appreciation to prove it.
However, when I reflect upon the developments that have occurred across the cryptocurrency landscape over the last year, the most under-acknowledged trend and, I believe, the trend that still has the furthest to run, is that of governance.
It is hard to believe that only three years ago Tezos was still a white paper and a testnet. Aragon was just getting off the ground. Decred was one of very few governance projects with more than a year or so of track record. Now, in 2020, governance projects abound. Even products and companies for which governance is seemingly not central – from decentralized exchanges to stablecoins – have a strong and clear governance component. Crypto, over the last few years, has created a lab for experimentation with governance.
Teams and communities working on these products and protocols find themselves facing some of the same pressures and challenges of the men at the Constitutional Convention. They must, as Ben Franklin pointed out, be aware of their own biases and imperfections in defining their governance paradigms. They feel the pressure to get it right.
They are even working to answer similar questions as the framers were centuries ago: Who should be represented and how? Who has veto power? How do we raise funds to ensure the longevity of the project? How should funds be managed and doled out? How do we create checks and balances? How do we ensure that those checks and balances do not generate so much inefficiency as to hamstring progress?
See also: Jill Carlson – Bitcoin’s Price Is a Poor Proxy for Its Utility
These questions of who has a voice, how proposals are made, where they are debated and how they are decided are as old as the notion of governance itself. Now we have a smaller-scale and lighter-weight venue than a nation-state to test different answers. We also have the option to fork, meaning the new framers do not need to hammer out endless concessions and compromises. There is room for more rapid, radical experimentation than ever before.
The framers of the Constitution two centuries ago revolted against and seceded from the United Kingdom. They were not quite sure what the new system would be, but they knew the values it would be founded upon and hammered out their best attempt at a new model of governance, one that has persisted through to today.
So, too, have those who are working in the crypto industry seceded from an old system. Like the framers, we have not yet defined what the new system will be. But, with 2020, we are getting there. And unlike those men gathered in Independence Hall, we have the luxury of iteration, experimentation and the coordination made possible by the technologies of our time.
