Dan Larimer recently published a lengthy treatise on decentralizing governance and the dangers that face cryptocurrency and blockchain in the coming years.
Larimer on Governance
Larimer has a long history in cryptocurrency making him one of the industry’s more recognizable figures. He founded the cryptocurrency platform BitShares, co-founded the social media platform Steem and currently serves as Chief Technology Officer (CTO) for Block.one, a company that played a large role in the development of EOS.
Hey @joerogan you talk a lot in your podcasts about a decentralized and censorship resistant social media platform. Check out #Voice which is being built on the $EOS blockchain. EOS & Voice CTO, and #blockchain legend, Dan Larimer @bytemaster7 would be a great guest on your show
— BlockchainKid (@blockchainkid) June 27, 2019
Larimer is a strong proponent of decentralization. Speaking broadly about the propensity of failed governance throughout history, he highlighted that most systems tend to gain momentum when first set off-balance.
As opposed to radical change leading to the creation of an unlevel playing field, Larimer finds the real danger lies within small, initial catalysts. He provides the metaphor of a board balancing on a single point,
“Once it starts to lean it gains momentum with a positive feedback loop which accelerates the rate at which the board is tilted until it is [sic] completely falls over.”
Single-Metric Blockchains in Danger
The Block.one CTO applied his logic to cryptocurrency and the communities inspired around them. Inevitably, blockchains and cryptosystems are required to impose a set of rules to ensure their function. Communities are then forced to follow these rules, which in turn becomes a form of strict governance.
According to Larimer, the majority of blockchains rely upon a single metric or small subset of metrics which allow for manipulation–and the eventual ‘tilting’ of balance.
Larimer advocates cryptocurrencies adopting a large set of governance protocols,
“Any single metric, whether proof of stake or proof of work will become dominated by an entrenched few who are most adept. This is why blockchains should be governed by many different proof-of-work, proof-of-burn, proof-of-stake, proof-of-person, proof-of-location, etc.”
“Blockchains based upon any single proof-of-x metric will become centralized even if those in power spread propaganda about how decentralized the system is.”
The Illusion of Decentralization
The focus on a limited set of governance protocols has created what Larimer views as the “illusion” of decentralization. While cryptocurrency may be less centralized relative to government fiat, it possesses points of weakness that could be exploited.
He calls for “open-entry and objective competition” as a way to bring about true decentralization of governance and protect society from “corrupted” insiders.