The Revolution of Peers
If you are still unaware of it, it is time now to prepare and position your business for the biggest disruption since Internet. It's time to prepare it for The Great Transition, the impact on economy coming from distributed networks, i.e., networks without a central authority.
It has been called The Silent Revolution, and sometimes The Second Digital Revolution. But I prefer to call it The Revolution of Peers.
During the last five to ten years, different forces coming from different backgrounds are pushing towards the same direction: the empowerment of people ("peers") for creating new types of organizations not depending on central structures.
These new organizations are using their lean, open, distributed, and agile structures in order to create a competitive advantage in front of the incumbent corporations used to dominate most classical sectors, such as finance or energy.
The Great Recession, and especially the following period of macroeconomic recovery, showed that the transmission mechanism between country wealth and citizen's welfare was broken, which has led us to a period of unprecedented inequality.
#1 The evolution of Commons-Based Peer Production into Open Value Networks
Commons-Based Peer Production (CBPP), started around the software sector, organizes production based on decentralization, collaboration and non-property. Wikipedia and Fablabs are early examples of CBPP. It has been stated that CBPP works beyond the limits of the market economy, as, in most times, it creates social value through voluntary work or is based on non-market transactions. But CBPP was also the seed of the Sharing Economy. And, although current sharing economy is far away from the principles of collaboration and non-property, it has shown as there is a huge demand for peer-to-peer transactions.
But, we have seen in the last years how CBPP is evolving towards a new kind of organization, the open value network (OVN), organizations built around four main principles for creating value: transparency, openness, horizontal governance, and decentralization. Sensorica, in Montreal, or Enspiral, in Auckland, are two examples for OVNs.
#2 The evolution of cooperativism: Open and Platform Cooperativism
Since its beginning 170 years ago, cooperativism has been brought into question as an effective form of organization for competing with investor-owned firms. Although there are successful cases coming from cooperativism, this form of organization has not become dominant.
But, during the last years, we have seen the rise of two different but complementary movements into the cooperative world. From one side, open cooperativism, critical with those cooperatives that, after years of contact with capitalism, were soaked into competitive mentalities and non-participatory decision mechanisms. Open cooperativism is based on models oriented towards the common good, in which all the stakeholders are included into the governance and are socially organized from a global point of view.
On the other side, we have seen the convergence between cooperatives and collaborative economy practices. Platform Cooperativism was born as an alternative to transform current sharing economy centralized platforms with more democratic systems of governance, coming from cooperativism; and an alternative to transform cooperatives with the adoption of technology for managing their activities and developing new collaborative models.
#3: Blockchain-born organizations: DAOs
Blockchain offers an immutable, transparent, and distributed ledger of transactions. It runs on peer-to-peer networks that enables trustless consensus through proof of work. Blockchain is usually seen as the next generation of Internet. And, as it happened before with Internet, there is an idealistic view attached to its distributed nature. This distributed trustless nature implies that Blockchain-based systems don’t require a centralized trust organization.
If we think about it, ledgers are instrumental in capitalism. We use them to keep track of identity, property, contracts, and all type of transactions. We currently access centralized organizations that takes care of the ledger to know who owns what, and what values were transacted and how. These organizations are public institutions, banks, some profit companies, and so on.
In 1994, Nick Szabo created the term ”smart contracts” to refer to ”a computerized transaction protocol that executes terms of a contract”. What smart contracts enable are structured relationships between parties without the need of a trusted intermediary. In other words, smart contracts running on a DLT enable distributed governance.
Blockchain allows then to use DLTs for running transactions without the need for central authorities providing trust, and to generate and apply rules for governing new types of organizations.
A governance with new rules
If we take into account these three forces all together, what we have is the so-called revolution of peers:
- A movement towards transparency, decentralization, collaboration, and more democratic types of governance coming from both the open-source world and the cooperativism.
- A technology (Blockchain) that makes it possible.
- A demonstrated demand and interest from people for the development of peer-to-peer services.
But, with all of this said, there is still something that we usually forget when dealing with distributed systems:
The governance of distributed systems is not easy, and always more difficult then the governance of centralized systems.
This revolution of peers is causing a peer-to-peer disruption. New organizations are created for providing the same service than incumbents, but under the new technology. And new business models and applications are going to be launched in the next following years.
There is a need for governance that goes beyond the governance of newly created organizations. We also need a new governance for the new markets to come.
This is what Kedia is beginning to develop during this 2017.
If it sounds interesting to you, don't hesitate to contact us!