Blockchain and the Promise of Decentralised Governance (2/2)

In her influential paper “Blockchain Technology and Decentralized Governance: Is the State Still Necessary?”, Marcella Atzori critically explores blockchain applications from a political perspective.


She presents her hypothesis arguing that despite the emergence of technologies capable of decentralising social choice processes through algorithm-based consensus, the role of the state remains to be a necessary central point of coordination in society. Social choice processes are collective decision processes and procedures, such as preferences, votes or welfare. The aim is to find fair rules of aggregating these individual choices and arrive at an outcome where everybody who voted or shared their preference is represented accordingly.



Algorithm-based consensus is a specific mechanism underlying the validation processes of the different blockchain applications. In order to remunerate those who participate in the validation process, cryptocurrencies serve as means of payment. In simplified terms, depending on whether the company running the blockchain has created its own cryptocurrency or not, participants receive either those tokens or already existing ones, for instance Ethereum tokens.


Consensus algorithms have been designed to enable equality and fairness for the individuals as well as the whole group, by aiming to offer a codified solution to address several objectives and problems:


- Agreement: Everything the participants of a certain blockchain service agree on is being gathered to serve as the status-quo


- Collaboration: Each participant tries to enhance the group’s efficiency


- Co-operation: Each participant tries to enhance the group’s effectiveness


- Equal Rights: The participants’ preferences regarding a decision are of equal worth


- Participation: Full voter participation (“full” turnout is a necessary element)


- Activity: All participants carry the same responsibility, for they are equally active (fixed assumption/premise)


We can derive that consensus algorithms aim to offer solutions for organisational matters analysing this list of objectives. Building on the first article of this two-parter, it becomes apparent that the above approach might help tackling a society’s organisational problems, but cannot yet offer a sophisticated formal framework that meets the complex normative requirements of a political theory. While several ethical considerations have clearly influenced the design of the various algorithms and their objectives, mostly egalitarian thoughts (all people deserve equal rights and opportunities), however, have served as the ethical foundation.


While this perspective is indeed well-intentioned, it does not take cultural differences into account which might have differing perceptions of the role of the government and social hierarchic structures. The adaptation of such a simplified model would destabilise most countries due to a lack of space for normative belief systems that are in place. Countries that predominantly understand coercive authority as a desirable model would be overwhelmed with the sudden shift in responsibility; and if the government in power were to take over the role of controlling these platforms that enable decentralised governance, it will continue to have significant power over civil society, and therefore not much will have changed.


Libertarian claims for non-hierarchic forms of governance that can provide a fair order of preferences without an entity that holds more power than the average citizen - for instance a politician representing voters - yet remain utopian visions. Hierarchies, markets, and networks emerge naturally and form societies. Humans have understood that certain constraints – in form of laws and other rules – can in fact be beneficial to justice of social systems, and therefore “[…] these very dynamics prevent both utopias and dystopias to become real”. As pictured in the first article, it is definitely not clear whether it might be blessing or curse to exchange politics for markets and turn citizens into customers. It necessarily depends on the role of norms and traditions dominant in the respective country, and their combinability with such disrupting technologies.


Marcella Atzori therefore points out very precisely that decentralisation through algorithm-based consensus is an organisational theory, not a stand-alone political theory, as it lacks a richer epistemology, namely one that takes existing norms into account and leaves space for complex social dynamics to develop.


Author: Patrick Lehner

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