As mentioned in an earlier post, I consider the blockchain to be a truly revolutionary development. The massively distributed ledger of the type used to maintain the integrity of Bitcoin transactions marks a great achievement in the context of the already transformational power of the Internet. Indeed, I believe blockchains to be a key milestone in fulfilling the Internet’s promise.
More exciting than the implications for cryptofinance, however, is how this technology can be used as a basis for running highly transparent organizations based on open-source code and publicly auditable business rules. This is a “Distributed Autonomous Corporation” or DAC.
The blockchain doesn’t have to be confined to tracking Bitcoin activity. Swan persuasively contends that the advent of the blockchain platform as “a universal, permanent, continuous, consensus-driven, publicly auditable, redundant, record-keeping repository” is a technological game-changer as significant as the creation of the Internet. Since it is a decentralized public ledger, the blockchain enables the trustless transfer and accurate recording of all transactions and documents.
The result is, in Swan’s words, “a new paradigm for organizing activity with less friction and more efficiency.”
Instead of Bitcoin transactions, a blockchain could be the basis of publicly recording company events and making business rules public, transparent, open-source and auditable. This could include issuing/transferring shares, paying in stock for services, insurance, digital identification, and so on. As The Economist’s “Babbage” columnist explains:
Programmed with an incorruptible set of publicly-available business rules (open source code), a DAC would be more trustworthy than a human-run corporation. You could, of course, develop firms with more dodgy practices in mind, but, as Dan Larimer of Invictus Innovations explains: “although DACs can still be designed to have a robotically inviolable intention to rob you blind, to enter the open source arena they must be honest about their plans to do so.”
One of the most intriguing visions I’ve encountered is that of Bitnation. Within the broad ecosystem of government-like services that it envisions replicating on the blockchain (e.g., identification, land registry, etc.), one proposed distributed application is “Bitcorp”:
Bitcorp [is] our in-house app for corporate incorporation on the blockchain.
It will be possible to create company registry, shares emission and management, cryptoequity trading, fundraising, shareholder agreements and integration with other functions in the Bitnation ecosystem, such as Bitnation Passport, Dispute Resolution, and more.
People can certainly talk about all of the different ways these efforts might fail. Strangely, they echo many of the criticisms about the then-heretical notion of PR on the social web in the ‘90s and ‘00s. There are plenty of exciting efforts to follow, including some intriguing and entertaining proofs-of-concept. Heck, even Institutional Investor – with an audience composed of folks within some of the organizations that blockchain developers might seek to disintermediate – had some nice things to say.
Unfortunately, our industry will likely race to achieve the merely cosmetic. I fear there might already be rumblings of “First consumer product launch recorded onto a blockchain wins!”
Public relations certainly had its teething issues while dealing with the advent of the Internet and, later, the social Web. Getting it to understand this highly transparent, massively distributed environment – and the movement that inspires it – will be full-on jaw surgery. Bitcoin, or any of the efforts mentioned above, may or may not flame out spectacularly, but the blockchain is here to stay.
Phil Gomes is a senior vice president in Edelman Digital based in Chicago.
Image by Haya Benitez.