Learn and apply the rules of a new distributed economy.

Our world is changing faster and faster. Only 12 years ago, we lived in a world with neither social networks nor smartphones. I remember perfectly the concept of an ”always connected” user as something belonging to a future of Internet. This future is here now, and the sad thing is that we are unaware of the rapidness of these changes. Take a look at the trailer of ”You’ve got mail”, a film from the end of 20th century, to discover (or recall) the relationship we had with technology.

Twenty years later, we are still using mail, but living now in a ”never disconnected” society. The last decade has also seen the rise of the sharing economy, also called access economy or extractive economy, which has developed a new economic model based on the existence of platforms. This new economic model is called by some scholars platform capitalism, as its orientation is mercantilist and its goal is taking the maximum profit from the two-sided markets connected through them. Platform Capitalism, represented by Uber, Upwork, Deliveroo, and many others, makes revenues from the connection of a market of supply and a market of demand, and its related transactions. Most of them replace professional low-skilled activities developed under the scope of labor contracts by self-contractor relationships in which the platform’s company regulates both the working conditions and the number of its ”collaborators”. Some of these platforms attract self-contractors under statements, as in the case of Amazon Flex, such as: ”Be your own boss. Great earnings. Flexible hours”. This is bullshit.

From a micro-scale point of view, the worker, usually over skilled for the needs of the work, develops the same activity than other professionals, but at a lower salary and without the same working conditions that similar workers have, such as unemployment compensation or health benefits. From a macro-scale point of view, platform capitalism feeds what is called the gig economy, and allows the development of a new social class, the precariat. The precariat, a new social class characterized by inequality and insecurity, is a consequence of a capitalist system that has forgotten the common good as one of its outcomes. In a process that begins in the 70s, an increase of GDP and a subsequent increase of individual’s welfare are no longer correlated. Globalization, digitization, and the Great Recession are some of the stations of this process.

In front of this, we can identify several types of people.

  1. The “just-study” type. We have people that think that inequality and other social ”misadjustments”, as they called it, are caused by the lack of skills, effort, or both, from individuals suffering a bad situation. Then, working harder in an equal-opportunity society is enough for succeeding or improving anyone’s situation.
  2. The “I don’t care” type. We have people that perceive social problems, but they don’t care about them.
  3. The “Nothing to do” type. We have people that perceive social problems, but they think that they cannot influence the system because of the lack of power that they have.
  4. The “I do what I can” type. We have people that perceive social problems and fight against them with any resource that they have, individually, in small groups, creating companies, or associations.
  5. The “We need to change it all” type. And we have people that believe that the problem is inherent to the system; so another system is needed in order to create a better world. This mission mixes a dystopian capitalistic future with a utopian transformation in which humanity takes awareness of its problems and tries to actively and efficiently to solve them.

People from groups 3, 4 and 5, probably agree on the idea that we need to work for creating a common good oriented society, i.e., a society in which the economic activity benefits not only a few but the whole society.

Why is Blockchain relevant in this scenario?

It’s quite simple: Blockchain is able to empower people through technology.

How? I would say that there are three main characteristics that are key for that:

  1. There is no need for middlemen. In other words, connections are made directly peer-to-peer.
  2. It is a system of trust. Most of our current transactions are based on the trust we give to public or private institutions. For example, when we put our money into bank accounts, it’s because we trust that the bank allows us to access it whenever we want. With Blockchain, we don’t have middlemen, but we don’t need it either.
  3. It integrates a secure payment method. It seems trivial, but this is one of the most powerful tools that Blockchain provides us. Most of the transactions involve the movement of money from one part to the other. Just imagine Blockchain without this feature. We would trust Blockchain from the point of view of authenticity or traceability, but accessing an external part for moving money would involve trusting a third-party. The integrated payment method gives Blockchain the robustness for building decentralized autonomous organizations.

In addition to these features, Blockchain can also be seen as:

  • A big and distributed computer.
  • An immutable register of transactions and records.
  • A system able to run programs.
What’s the social value of Blockchain?

Blockchain has the potential for empowering the society to take control of the initiatives needed to provide solutions to social problems, where public institutions do not want or are not able to act; and to fight against the negative externalities caused by bad market behaviors coming from some private companies.

How can we do that?
One thing is for sure. It’s not possible doing that if we resign to Blockchain’s inherent properties, decentralization and trust.

In other words, forget about the power of transformation for all those organizations deploying permissioned Blockchain systems with the only motivation to replicate existing business models in order to cut costs and get more profits. They are not going to change the world.

What does trust mean?

It not only means that we are able to blindly conduct transactions. It also means that we are able to use trust as an asset. For example, let me take a look to your reputation (as a person in real life, not only as a service’s user) when I consider becoming a guest; or let me know how you are going to use (and prove it, after some time) that money that you earned thanks to my payment for showing me the city.

The implementation of trust allows us to remove the gap between good intentions and proven realities.

This is crucial for the development of the social economy. We need to increase the threshold for the standard of trust, and Blockchain allows us to implement it.

Trust used as a competitive advantage asset allows us to move the competition into the field of the common good that the activity creates, and let us educate more social-sensitive consumers.

What does a distributed system mean?

This is the big challenge.
A distributed system means that there are no central concentrations of power, i.e., decisions are taken following some pre-established system of governance. This is a challenge because this model is completely different from what we are used to. It’s easy to imagine an Uber without Uber; an Airbnb without Airbnb from the point of view of the service, but it’s difficult to imagine how the community would decide what strategy to follow, or what prices to establish, or how to get or invest resources, or how to launch communication campaigns in order to engage more users.

But we are going to see very soon some attempts to solve these problems because two things are quite clear:

  • The sharing economy proved us that there is a demand for peer-to-peer services.
  • During the period of transition (no matter if it is shorter or longer) new distributed systems are going to coexist with incumbents (e.g. existing sharing economy platforms) and compete with them for users.

Competing with incumbents means that we have again two different options: playing with the same rules of the game or just reinventing the game. Playing with the same rules involves creating more value for customers in order to they are able to choose our service; create new rules usually involves attracting users from activism, or from the roots of social causes.

Both paths face the problem of growth. Does social transformation require growth? How can a social transformation become mainstream? Answers to these questions are not probably into the analysis of Blockchain.

But Blockchain, from its distributed nature, is useful for creating transformations coming from the aggregated behavior of newcomers or early adopters.

Blockchain allows creating big waves with a sum of micro changes, at least from a theoretical point of view.

In my opinion, at least while we wait for better systems of governance, we probably need distributed organizations around models of governance such as holacracy or liquid democracy. The transition towards more liquid systems of governance involves the transformation of systems that have been successful for years from the point of view of a distributed decision-making. We see today as co-ops are evolving under the influence of platform cooperativism or open cooperativism, while we also see as some organizations experiment with the concept of open value networks.

Is this real?

There are currently thousands of Blockchain projects evolving just now. Most of them are in alpha or beta phases. Most of them are following the same rules of the market than startups. In the case of Internet, it took 10 to 15 years to evolve from email, as a mainstream application, into other mainstream applications. In the case of Blockchain, we can expect something similar. We are now in a stage of experimentation. It is going to take five to ten years, probably, until we see something creating real engagement.

There is one problem, in my opinion, related to the socially inspired projects that we currently see over Blockchain. We see, for example, projects for developing communities of unbanked people through the provision of financial services, or for sending remittances from the Western economies towards Asia or Africa, but we have no way to know, other that the passing of time, if these projects are looking for a real social transformation, or they have only identified very profitable (and huge) new markets, thanks to the emergence of a new technology.

Is this realistic?

Internet pioneers thought they were changing the world. The world has changed, indeed, but perhaps not in the intended direction. Blockchain gives us a new opportunity for achieving that purpose.

I think we are going to witness a social change even larger than one created with Internet.

Let me finish with some principles for creating social oriented Blockchain-based systems:

  • Never give up the social orientation.
  • Design processes based on distributed networks.
  • Allow and implement decision-making processes.
  • Don’t be afraid to support your organization with well-known forms of governance during early stages, such as co-ops, foundations, or even regular companies, during early stages of activity.
     * Always design in the base of the common good.
     * Don’t become a prisoner of the technology. Blockchain is the sail, but raising it in a proper way is your responsibility.

Are you part the problem, or are you part of the solution? Because Blockchain is only the tool.

This speech was given on May 20, 2017, as a part of the Authenticitys Summit 2017. Many thanks to all that made it possible.