William Mougayar, a CoinDesk columnist, is the author of “The Business Blockchain,” producer of the Token Summit and a venture investor and adviser.
It has become trendy to apply blockchain governance principles to almost anything. But if we want to make blockchain organizations work, I believe we need to make an important distinction between the “governance of blockchains” and “governance by blockchains.”
What works for the technical realm of blockchains does not automatically translate to the running of businesses or social organizations, as attractive as it may be to apply the blockchain novelty factor. Democracy is great for society and government, but it is bad for business.
Over the past few years, we have learned a lot from the “governance of blockchains,” primarily about consensus and decentralization as the two primary characteristics. Consensus in the blockchain context refers to the nodes on the network agreeing to synchronize on the state of transactions for that blockchain. And decentralization is the preferred topology for these nodes: they are geographically distributed and diversely owned. This ensures redundancy of failures as well as a level playing field of participative inclusion, both important outcomes of open blockchains.
Our applied knowledge stalls thereafter.
We know much less about the field of “governance by blockchains,” as this is still at the experimental stage.
The desire to apply consensus methods and decentralization architectures to how we run organizations is an interesting concept. It stems from well-intentioned objectives wanting to mimic the governance of blockchains as a guiding strategy.
In the simplest form, people who have a stake into projects are seen like nodes, and they are given voting power. The more decentralized the better. Voilà. If it works for a blockchain, it should work for organizations, no?
Except that people are not…