The blockchain world is currently obsessed with defi. In the past few months, billionsin digital value have been staked, swapped and farmed in radical experiments using liquidity pools, automatic market makers and decentralised exchanges.
Defi is easily belittled as a collection of scam-riddled projects powered by magic internet money. Perhaps. But more optimistically defi is a spectacle of entrepreneurial discovery.
Forthcoming paper in Frontiers in Blockchain (together with Marta Poblet, Oleksii Konashevych, Aaron M. Lane and Carlos A. Diaz Valdivia)
Abstract: Oracles were trusted sources of knowledge for public deliberation in classical Athens. Very much like expert and technical knowledge, divine advice was embedded in the deliberation and decision-making process of the democratic Assembly. While the idea of religious divination is completely out of place in our contemporary democracies, oracles made a technological comeback with modern computer science and cryptography and, more recently, the emergence of the blockchain as a “trust machine”. This paper reviews the role of oracles in Athenian democracy and, stemming from the renewed use of the term in computer sciences and cryptography, analyses the case of oracles in the nascent blockchain ecosystem. The paper also proposes a sociotechnical approach to the use of distributed oracles as informational devices to assist deliberative processes in digital democracy settings, and considers the limits that such an approach may face.
When Entrepreneurs Meet: The Collective Governance of New Ideas challenges our understanding of how entrepreneurs crystallize opportunities surrounding new technologies. While innovation is the fundamental driver of growth and prosperity, how the earliest stages of entrepreneurship are governed remains elusive. This book creates a new, institutional approach to understanding entrepreneurship before emphasizing how entrepreneurs create governance structures to coordinate new knowledge resources.
Rather than the conventional view that entrepreneurship happens inside firms, this unique transaction-cost economics analysis of entrepreneurship suggests it might begin earlier in hybrid, polycentric self-governance structures, including the innovation commons. Allen explores and analyses various examples of these structures, including hackerspaces and the institutions coalescing around the development of the blockchain economy, along with the dynamics of how those institutions might collapse into firms. This new understanding of the entrepreneurial governance problem is also connected to contemporary questions about the purpose, scope, and application of innovation policy.
We are on the cusp of a dramatic wave of technological change – from blockchain to automated smart contracts, artificial intelligence and machine learning to advances in cryptography and digitisation, from Internet of Things to advanced communications technologies.
These are the new technologies of freedom. These tools present a historical unprecedented opportunity to recapture individual freedoms in the digital age – to expand individual rights, to protect property, to defend our privacy and personal data, to exercise our freedom of speech, and to develop new voluntary communities.
This book presents a call to arms. The liberty movement has spent too much time begging the state for its liberties back. We can now use new technologies to build the free institutions that are needed for human flourishing without state permission
The New Technologies of Freedom is part of a joint project between the RMIT Blockchain Innovation Hub, an academic research centre based at RMIT University in Melbourne Australia, and the Mannkal Economic Education Foundation. Mannkal’s mission is developing future free market leaders. Mannkal promotes free enterprise, limited government and individual initiative for the benefit of all Australians.
Cryptocurrencies and the State
Blockchains and Smart Contracts
Artificial Intelligence and Adversarial Liberty
Freedom of Speech in the Digital Age
The Future of Privacy
Special Jurisdictions and Cryptodemocracies
Technology for Better Institutions in Poor Countries
Abstract: Blockchain technology acts as infrastructure for self-executing smart contracts. Because contracts are incomplete and some parties are opportunistic, these new contracting possibilities have created challenges of dispute resolution. For instance, will smart contracts be recognised, and any disputes resolved, within the existing courts of jurisdictions? In this paper we first map some institutional governance possibilities for contracting parties (e.g. mediation, private arbitration, courts) to create a Dispute Resolution Possibility Frontier (DRPF). Second, we provide case studies of emerging blockchain-based mechanisms to solve dispute resolution challenges. Blockchain-based smart contracts might not only create dispute resolution problems, but also act as a technology for entrepreneurs to create new mechanisms to solve dispute problems, including those arising from traditional legal contracts. Contracting parties will subjectively interpret their most effective governance mechanism to resolve disputes, and the costs of dispute resolution will change over time through a process of institutional innovation.
Published in Research Policy (with Chris Berg, Brendan Markey-Towler, Mikayla Novak and Jason Potts)
Abstract: For the past century economists have proposed a suite of theories relating to industrial dynamics, technological change and innovation. There has been an implication in these models that the institutional environment is stable. However, a new class of institutional technologies — most notably blockchain technology — lower the cost of institutional entrepreneurship along these margins, propelling a process of institutional evolution. This presents a new type of innovation process, applicable to the formation and development of institutions for economic governance and coordination. This paper develops a replicator dynamic model of institutional innovation and proposes some implications of this innovation for innovation policy. Given the influence of public policies on transaction costs and associated institutional choices, it is indicated that policy settings conductive to the adoption and use of blockchain technology would elicit entrepreneurial experiments in institutional forms harnessing new coordinative possibilities in economic exchange. Conceptualisation of blockchain-related public policy an innovation policy in its own right has significant implications for the operation and understanding of open innovation systems in a globalised context.
Abstract: This paper examines the institutional context of the entrepreneurial discovery of blockchain applications. It draws on institutional and entrepreneurial theory to introduce the economic problem entrepreneurship in the early stages of new technologies, examines the diversity of self-governed hybrid solutions to coordinating entrepreneurial information, and draws policy implications. To perceive a valuable and actionable market opportunity, entrepreneurs must coordinate distributed non-price information under uncertainty with others. One potential class of transaction cost economising solution to this problem is private self-governance of information coordination within hybrids. This paper explores a diverse range of entrepreneurial hybrids coalescing around blockchain technology, with implications for innovation policy. Defining the innovation problem as either choice-theoretic or contract-theoretic changes the remit of innovation policy. Innovation policy and blockchain policy should extend beyond correcting sub-optimal investments or removing barriers to action, to incorporate how polices impact entrepreneurial choices over governance structures to coordinate information.
Book published with Lexington(with Chris Berg and Aaron Lane)
A cryptodemocracy is cryptographically-secured collective choice infrastructure on which individuals coordinate their voting property rights. Drawing on economic and political theory, a cryptodemocracy is a more fluid and emergent form of collective choice. This book examines these theoretical characteristics before exploring specific applications of a cryptodemocracy in labor bargaining and corporate governance. The analysis of the characteristics of a more emergent and contractual democratic process has implications for a wide range of collective choice.
Technologies of choosing
A framework for institutional collective choice
Delegating the vote
Bargaining and exchange in a cryptodemocracy
Cryptodemocratic corporate governance
Cryptodemocratic labor unions
The future of a cryptodemocracy
“The problem of democracy is that it simultaneously invests power in the people while removing any incentive to use their power wisely. Cryptodemocracy is a thorough and rigorous investigation into an innovative solution: Turn votes into a kind of tradeable property right and allow voting markets. New blockchain technologies allow us to overcome the problems of older voter market proposals. This is a book that deserves to be widely read and discussed—and we owe it to ourselves to experiment with its suggestions.” — Jason Brennan, Georgetown University and author of Against Democracy
“Public choice theory has now ossified around the conventional practices of voting and legislation. In this volume, Darcy Allen, Chris Berg, and Aaron Lane show how that ossification might be transcended by bringing ideas from blockchain technology to bear on democratic governance. While the authors recognize that they have not written the final word on this topic, they have surely created a template that will provide analytical points of departure for pursuing political economy in new directions.” — Richard E. Wagner, George Mason University
“We stand on the edge of revolution not just in the way democracy works, but in the very idea of what democracy can be. Blockchain technology can immediately solve all the problems of voter fraud, low turnout, and expensive recounts, while expanding the ability of citizens to delegate their votes and register their views on important topics that are now decided behind closed doors. This landmark book is the first thing I’ve seen that understands the potential, both benefits and risks, of the cryptodemocracy on the horizon — a turning point in the literature connecting political science and technology.” — Michael C. Munger, Duke University
Bitcoin was invented in 2008 by Satoshi Nakamoto as a censorship-resistant cryptocurrency built for the internet. With regular fiat money centralised bodies such as banks and governments control the records of who owns what. For bitcoin those records are held in a decentralised blockchain. Blockchains are updated and maintained by a decentralised network. To ensure the transactions and records are correct, economic incentives to continually drive the blockchain network towards consensus. Continue reading →