Blockchain & Society

Updated: 2 days ago

The blockchain is as much an institutional technology as an information technology. It not only enables us to greatly strengthen the capacities of peer networks through automated trust but also by enabling the recording and exchanges of value it allows us to design incentive systems. Of course peer-to-peer networked forms of social organization have always been there from the earliest days, however, previously they have remained the domain of the local and the personal as they do not scale well without supporting communications technology. Throughout the modern era, formal hierarchical social structures came to replace informal communities as the dominant organizational paradigm. It is only in the past decades that we have seen the emergence of a new form of social structure that reverses this process, the social network.

Social Media

With the rise of web 2.0 technology came a revolution in the form of social networks that now connect billions of people engaging them in a very personal way. Today social media is the forum where much of public and private discussion takes place, in which people express their values, commenting and sharing, connecting and collaborating in new ways. This leaves a huge mismatch between our existing formal institutions and these new informal social networks, between the world of the physical and its hierarchies and that of the digitally networked organization; with constant friction between them as social networking increasingly comes to affect events in the offline world.

Much of this mismatch remains because we have a somewhat secure social infrastructure for enforcing and enabling trust offline in the form of the nation state’s institutions, but to date have not had this for social networks that remained largely lawless, trustless and the property of private enterprises that organized them towards extracting data and creating profits via advertising. This is what the blockchain could change. The decentralized web could provide the security layer to enable trust in social networks, trusted identity, trusted reputation, trusted value exchange, all supported by a decentralized IT infrastructure.  

Steemit is the best example of a social network built on the blockchain which has scaled to be a relatively large application with over half a million users and over four million posts as of the start of 2018. Using a blockchain enables rewarding comments and posts with secure tokens of value. User accounts can upvote posts and comments, and the authors who get upvoted can receive a monetary reward in Steem tokens. People are also rewarded for curating popular content. Curating involves voting comments and post submissions. Steemit has a reputation system where an account’s received votes can influence its reputation up and down, incentivizing online etiquette and interaction within the community.

Open Organizations

In the previous internet of information, online social networks remained relatively limited in their capacities, largely confined to the domain of media and information exchange. In a secure internet of value, these kinds of social networks can potentially power all of human social organization, from how we organize enterprises and work together, to how we do education and governance. This is a brave new world, for the past few hundred years we have fleshed out the hierarchy with ever more detail and understand well how it works, but moving from this world of the hierarchy to that of networks requires thinking about many aspects of what regulates social organization and makes them work – going from chains of command to feedback systems, from fixed roles to functions, from authority to reputation, from closed boundaries to open networks – means reconsidering and redesigning the basics of social organization.

As with other areas the decentralized organization will be an open network of protocols that enable people to couple or decouple from the network on demand, contributing small or large increments of value in exchange for tokens. Without centralized control, distributed feedback mechanisms in the form of reputation systems will play a key part in regulating the organization. Likewise, big data and analytics will likely play a part in working to understand the network and its users, dynamically coordinating resources and capabilities according to their specific capacities and requirements. 

Colloney is one such project that is trying to build a distributed social organization for collaboration within blockchain based social networks. Built on Ethereum Colony describes itself as the people layer of the decentralized protocol stack. Rather than centralized ownership and hierarchical management, smart contracts distribute ownership according to the value each individual contributes, and influence emerges from the bottom-up through systematic peer review of contributed work. Each colony has its own token that represents a share of the ownership of the organization. Smart contracts are programmed to distribute ownership tokens according to the value each individual contributes. Contributors can later trade their tokens on the open market for cash. Colony also comes with a reputation system that allows people to review and grade others’ contributed work.


One of the main applications of the blockchain as an institutional technology could be in enabling new forms of political and governance structures that would be relevant for an age of connectivity and globalization. Over the course of the modern era, the bureaucratic nation-state formed as the critical infrastructure organizing and supporting all other forms of social institutions, from education to healthcare, to security. However, this institutional infrastructure of the nation-state has remained national in scope and capacities while major economic and technological changes are increasingly taking us into some kind of global system of organization. In short we increasingly live in a very complex globalized economic system that is the primary organizational structure for humanity in the 21st century, national governments increasingly have limited capacity to affect the workings of that system and this leaves societies without the capacities to shape their future or even have input into decisions that affect them as a community.

A number of different projects are currently trying to build the next generation of borderless governments base on the decentralized web including such projects as Culture, Bitnation and Democracy Earth. BitNation is a collaborative platform for do-it-yourself government built on blockchain technology. According to its official website, “Bitnation provides the same services traditional governments provide, from dispute resolutions and insurance to security and much more — but in a geographically unbound, decentralized, and voluntary way.” To set up a political unit with Bitnation a group of people would write their own legislation, put it onto a Bitnation blockchain and everyone who wants to live by it signs up. To give it some force, they would write smart contracts that are tied to assets they own. Blockchain combined with IoT make it possible to use information and technology instead of relying on force and centralized authority. In such a way it is possible to substitute expensive, error-prone intermediary parties for algorithms that never make mistakes are incorruptible and run automatically.

Likewise, the Democracy Earth project from Chile is building a self-sovereign system claiming that with the rise of open source software and peer to peer networks, political intermediation is no longer necessary. They are building an application called Sovereign, an open source and decentralized democratic governance protocol for any kind of organization. Sovereign is open source software for incorruptible blockchain-based voting within institutions of all sizes, from the most local involving two people to the most global involving all of humanity. Members own their own data securely on the blockchain network, vote on issues they care about or delegate power to those they already trust, while participatory budgeting is enabled by bitcoin & smart contracts.

Token Economies

With distributed networks, we could harness token economies to power political organization and social engagement in the management and development of their communities. The whole suite of public services could be provided by distributed blockchain networks through the use of social token economies. Social functions could be provided by anyone in return for tokens. Instead of depending on centralized institutions for all forms of social services they could be provided by anyone qualified and willing on demand, re-engaging and empowering citizens to take responsibility for their own communities, earning community tokens for taking care of elderly people locally, for performing acts that support local security watch schemes or even just mowing the lawn in the park, and for all the other functions that currently cost taxpayers lots of money. In this respect, public services would no longer have to be bound to a particular nation or territory. Similar with legal systems they too would no longer have to be bound by territory, a given community could choose its own legal system, as these projects aim to implement the full set of legal services for the creation of legal contracts, their adjudication, and enforcement. It simply requires interoperable standards between these different jurisdictions.

Systems Innovation

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