Tuesday, July 07, 2015

The Emerging Bitcoin Governance Regime...

As someone long immersed in the study of Internet governance, I often find it striking how similar the discussions and activities are surrounding another supposedly "ungovernable" phenomenon...  Bitcoins and alternative cryptocurrencies.

The Bitcoin system, like the Internet, has a highly decentralized architecture, and this is by design.  But also similar to the Internet, being decentralized is not the same thing as being in a state of anarchy.  Certain clearly identifiable stakeholders have influence in shaping Bitcoin's usage and development, and others even have a demonstrable authority to constrain or enable behavior with intentional effects.

The open source model has a long-established tradition of decisions being made by "rough consensus".  With Bitcoins, there are three different types of consensus that are all necessary - consensus about rules, consensus about history, and consensus that coins have value.  Because the blockchain at the heart of Bitcoin is based so strongly on distributed copies of transaction histories, any new changes to the system must acquire a rough consensus among the Bitcoin community in order for the new changes to be adopted by others and interoperable with the rest of the currency system.

The rough consensus model, then, is the primary way in which decisions get made regarding the technology.  Policies are built into the code itself.

However, human beings play a large role as well.  Bitcoin Core is software licensed under the MIT open source license, and is the de-facto rulebook of Bitcoin.  So the question for Political Scientists is:  Who exactly is writing the rulebook?

Officially, anyone can contribute new rules, or ideas for technical improvements, via "pull requests" to Bitcoin Core.  Anyone can formally submit a new Bitcoin Improvement Proposal (BIP) and advocate for their proposal to be adopted, which occurs when it gets published in the numbered Bitcoin Improvement Proposal series.

In reality, there are a small handful of individuals who have far more policymaking authority than others.  There are currently five developers who maintain Bitcoin Core:  Gavin Andresen, Jeff Garzik, Gregory Maxwell, Wladimir J. van der Laan, and Pieter Wuille.  These are the people who "hold the pen" of the Bitcoin rulebook.  Any rule changes that they make to the code will get shipped in Bitcoin Core and will be followed by default.

Beyond the Core developers, formal institutions have begun to play a larger role in Bitcoin governance as well.  The Bitcoin Foundation is a nonprofit founded in 2012 whose main roles are 1) to help fund the Core developers out of the Foundation's assets, and 2) to act as "the voice of Bitcoin" while engaged in lobbying national governments around the world who increasingly seek to regulate Bitcoin activity.  Some of the Bitcoin Foundation's board members have been involved with criminal and/or financial troubles, and it remains an open question to what extent the Bitcoin Foundation actually represents the Bitcoin community at-large.

All of which serves to illustrate just how much governance has already emerged in this supposedly "ungovernable" space.  Just as how the Internet's protocols, or "rules", are governed by the rough consensus model led by institutions like ISOC and the W3C, Bitcoin also has a clearly identifiable governance regime which makes decisions based on the rough consensus model, whose rulebook is the Bitcoin Core, and its rules are written by its five Core developers.  And although the role of formal institutions like the Bitcoin Foundation is still unclear, they are quickly becoming recognized as an integral part of the governance equation going forward.

The bottom line is that, even in decentralized systems, rules are needed just to ensure basic functionality.  And where there are rules, there are rule-makers. 

Meet the new boss, same as the old boss.



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