Antidote to Holacracy: Blockchain Smart Assets

New Strategies needed to Meet Group Needs in Holacracies
The failings-to-date of holacracy have to do with career growth, compensation, and capacity (in the sense of codification and deployment group knowledge). This is exciting news for learnings in prototyping decentralized flat governance models in groups. After the fact, it is quite obvious that career growth and compensation would need to be redefined in a holacratic model since they are still in the mode of the old structure. The needs behind these areas need to be elicited and addressed via other means. For example, the needs behind career growth could be learning, variety, and contribution, where previously career progression was a strategy for meeting these needs. Now, the needs are still there, but different strategies for meeting them in decentralized models need to be innovated, such as switching responsibilities with some frequency and the ability to learn about and contribute in new ways. Similarly with compensation; the underlying needs could be financial security, status, and being acknowledged, and now in holacractic models, these would need to be met differently. This would also be trued for the codification and deployment of new capacities emerging from the group operations.

Group Needs registered as Blockchain Smart Assets
One great benefit of blockchains is their potential agility in coordinating soft processes like ongoing group orchestration in a flat collaborative model. Blockchains can be a heightened level of holacratic operation that attends to the fundamental needs underlying group operations. Once elicited, registering group needs as blockchain-based smart assets can be a way of keeping the needs of the group alive on an ongoing basis. Participants could anonymously vote community token as to what group needs are being met/unmet and these addressed in the community meeting. Each group need, (like autonomy, collaboration, agreeing to the same rules, privacy, and creativity), could be registered as its own smart asset, with an address, thus community token could be anonymously voted to this address to indicate groups needs met/unmet.

Group needs as blockchain-based smart assets is an outgrowth of the Convergent Facilitation model for effective group operation. Convergent facilitation is a model for collaborative decision-making, a way to correct the paradigm of ‘no one makes a decision’ or ‘someone makes a decision for everyone else.’ The reason that convergent facilitation can an effective means of collaborative decision-making is both 1) quick and efficient use of everyone’s time in making initial decisions and 2) the quality of buy-in that keeps decisions sustainably alive in facilitating the group’s operations after the decision is made. This is because each person is encouraged and empowered to take stewardship and ownership of ‘our needs as a group.’ Instead of a begrudging compromise (‘it wasn’t really my decision’), this leads to a willingness to stretch to meet our group needs in empowerment because ‘it was my decision.’ Convergent facilitation helps us as a group to get into the highest mode of why we are here, to create something together that matters to all of us. It is a process based on principles that allows groups to make decisions together in cooperative manner, not win-lose, majority wins, or unwilling consensus.

One part of convergent facilitation is transparent decision-making. Probably not everyone wants to participate in every decision, but everyone might want to know what is going on. Thus, all decisions that need to be made can be listed, and community members can indicate their interest in leading, participating, and not hearing about different decisions (Figure 1). In this way, transparency, and trust in community decision-making are created. Everyone knows what is happening.

Figure 1. Convergent Facilitation Decision-making Matrix.

Rethinking Risk with Automated Blockchain Macroeconomic Indicators

Progress is underway to investigate and migrate many different parts of the banking, securities, and insurance industries to public and private blockchains. These operations include settlement and clearing, smart property digital asset registration and transfer of stocks, bonds, derivatives, private equity, and other instruments, and the structuring of more predictable insurance payouts. One next step is articulating how blockchains might be used more broadly across industries and economies for automated risk management and macroeconomic indicator generation. This could help meet the need for real-time knowledge about the health of financial systems, especially given their interdependence and global nature.

Automatic Macroeconomic Indicators
The pseudonymous property of blockchains could be a valuable parameter of transaction data structures that automatically relay meta-data as a semi-private input to large-scale open risk models [1] at the entity and macroeconomic level. Risk measurement and macroeconomic indicators could thus be produced automatically in real-time with tremendous aggregate transparency. The functionality could be built into fintech blockchains as a standard, with other organizations (like smart contract DAOs) to blend the data into macroeconomic statistics. Fintech standards bodies analogous to IEEE working groups could recommend protocols. Transaction meta-data aggregation could also engender a new class of economic indicators granularly measuring sophisticated parameters such as interlinkage, complexity, value-at-risk, and country-level inflows/outflows, and prediction markets and derivatives could run over these.

Hayekian Market Signaling
For automatically generated macroeconomic indicators, there would need to be a willingness to disclose exposure, whether pseudonymous or not, and whether on public or private blockchains. This could be compelled by regulatory entities, or better, volunteered as a market-signaling technique, just as the smart contract industry may fork into legally-compliant and a-compliant contracts. Prediction markets could be a further layer to elicit anonymously-voted opinions regarding data quality. This could facilitate the concept of markets as discovery in the Hayekian competitive currencies model and address systemic collusive tendencies and the predictive avoidance of collapses.

Immanence Philosophy of Risk
One effect of having granular, precise, real-time automated economic indicators and risk measurement systems is that it could enable more fundamentally our definition of risk to shift. As traditionally conceived, we have what is conceptually and emotionally a scarcity relationship with risk. Risk is something to measure, avoid, manage, and control, as exemplified by traditional finance and insurance models. There is the begrudging position of ‘no risk, no reward’ and ‘nothing ventured nothing gained,’ but this view is conceived in the scarcity of trade-offs, not in the abundance of making new bigger spaces for opportunity. Instead, risk could be reconceptualized as ‘taking a step,’ taking a step into an unknown of immanence, from an unknown yet supported downside and into a completely open upside. Immanence risk models could be realized through societal shared trust and the willingness to share information in comfortable ways to create the underlying layer supporting the open upside. A concrete example of this could be deploying open source FICO scores and decentralized credit bureaus with blockchain-based reputation structures where the global shared information trust model facilitates the local open upside possibility.

[1] Open Source Risk Model resources:
Hwang, J.H. Proposal for an Open-Source Financial Risk Model
Papadopoulos, P. OpenRisk.eu, Open Risk API (White Paper, Github)

New Legal Regime for Blockchain-based Smart Property and Smart Contracts?

Beyond the already wide-ranging digital currency and financial transaction applications for blockchain technology, there is another class of applications that could allow a complete reconfiguration of law and government. Blockchains are a new form of decentralized information technology, the trustless cryptographic public ledger system that underlies digital currencies like Bitcoin. Some of these potential application in law and government are that in the future, all property (hard and soft assets, and intellectual property) could be registered and transacted via blockchains as smart property. Likewise, all forms of legal agreements, contractual relationships, and governance could be enacted through code-based smart contracts.

An important consideration raised by the possibility of smart contracts and systems of cryptographically-activated assets is whether a new body of law and regulation is required to distinguish between technically-binding code contracts, and more flexible legally-binding human contracts. Contract compliance or breach is at the discretion of human agents in a way that it is not with blockchain-based or any kind of code-based contracts. Since it could be nearly impossible to enforce smart contracts with law as currently enacted (for example, a decentralized program already launched and running is difficult to control, regulate, or sue for damages), the legal framework is essentially pushed down to the level of the contract. It is not that lawlessness and anarchy would ensue with smart contracts, but the implication is that legal frameworks would become more granular and customized to the situation. Parties agreeing to a contract could choose a legal framework just as jurisdiction is selected as a parameter now. Thus smart contracts impact not just property law and contract law, but more broadly the notion of the social contract within society.