Blockchain, the miracle✨of the commons and the trust machine 🤖
A piece on why we think blockchain tech can reverse inequities, address the root of sustainability issues and create the trust we´ve lost.
We are only human, so we often find our brains fluctuating between fear 😱 of ecological breakdown and egalitarian tendencies to question the economic fairnesses of the world as it is.
Is our consumption destroying the planet and its inhabitants? And if so, is this fundamentally wrong by creating inequities for future generations? (Hint: we think the answers to these questions are yes & yes 😉)
In our opinion, the “tragedy of the commons” lies at the root of many of society’s biggest unsolved problems, as limited resources cause inherent inequities.
“That men, acting in their own self-interest, inevitably will deplete shared resources because they gain a substantial benefit in the short-term while negative consequences are shared among the whole group" (Hardien, 1968)
Imagine, though, the collective power we could harness if we are able to easily create trust and a sense of community between strangers, without paying some middleman or institution so that we, as private entities, may have the privilege of transacting and collaborating with one another?
With that in mind our interest in blockchain is it’s “trust machine” applications:
The blockchain lets people who have no particular confidence in each other collaborate without having to go through a neutral central authority. Simply put, it is a machine for creating trust.
Better me than you right? …while T-shirts 👕 are eating the world 🌍
Overproduction by fashion brands has created extreme product surplus to the point that they burn inventory to avoid offering a discount on unsold wares. Furthermore, as new trends emerge rapidly due to accessibility through e-commerce and social media, consumers are constantly purchasing new clothing items and disposing of old, out-of-trend items that ultimately end up in landfills and contribute to pollution.
How would you react when discovering your consumption habits are depleting natural resources? You have two primary options. One, boycott the products or brands causing the alleged harm and find an alternative, sustainable way of getting your fix. Two, carry on with “business as usual,” ignoring the impact of your consumption habits.
After all, it’s easy to justify that ´only me´ boycotting the product won’t make a large enough impact to make a difference.
There's often no incentive for individuals to hold themselves back from taking too much. In fact, individuals may even have a “use it or lose it” mentality; if they’re aware of the inevitability that the good itself will be depleted, they may think 🤔, “I better get my share while I still can.”
The concept of ‘tragedy of the commons’ coined by Garrett James Hardin in 1968 has since then been dominating the discourse on the limitations of collective action within sustainability, leading to a focus on building strong centralized solutions, as Hardin essentially proposed that only centralized planning though either strong governmental interference 👮♂️ or widespread privatization 🤑 can hinder a stupid man from eating his own feet..
Although Hardin's cynical perspective on humanity often seems to be a fitting way of framing how the world works (especially atm), history is also littered with examples of the human species being capable of organizing and governing in a more balanced way. Sometimes even performing ‘Miracles of the commons’ ✨ - enter Nobel prize winner and political economists Elinor Östrom 👩🏼🎓.
“What Hardin had portrayed as a tragedy was, in fact, is more like a comedy. While its human participants might be foolish or mistaken, they are rarely evil, and while some choices lead to disaster, others lead to happier outcomes. The story is far less predictable than Hardin thought, and its twists and turns can lead to uncomfortable places. But in those surprises lie the possibilities that Hardin never saw.” (The tragedy of the-commons is a false and dangerous myth, Michelle Nijhuis, 2021)
Miracles ✨of the commons
As a professor at Indiana University Bloomington, she studied collaborative management systems developed by indigenous communities on 4 different continents. Östrom´s research shows how these communities are fully capable of finding ways of both preserving a shared resource – live stock, pasture, trees and water – while providing their members with a living - some had been deftly avoiding the tragedy of the commons for centuries by developing local institutions capable of restoring and creating social capital (trust and access) amongst its members.
Ostrom challenged Hardins premise and suggested that a third option was also possible: allocating ownership of the resource system to a defined group of 'commoners' (as common property). She emphasized that all three approaches (government-based, market-based and community-based) should be looked at carefully for each particular situation, with the best solution often involving a 'polycentric' blend of the three approaches, where each approach covers for the weaknesses of the others.
In her seminal work “Governing the commons: The evolution of institutions for collective action” from 1990, Ostrom and her colleagues established 8 design principles for successful self-governing systems to overcome the tragedy of the commons:
But does it scale? …enter the trust machine 🤖
One of the criticisms that Östrom´s approach has faced over the years is that her solutions were simply “too complex” and non-scaleable as a collective´s capability to defuse the needed transparency, knowledge, culture and ownership decrease with scale - It might work for a small tribe out in nowhere, but imaging this in a highly industrialized society with all its complexity of cultural, political and economic subsystems - enter the trust machine 🤖
As the core competencies of blockchain technology is transparency, data audibility, privacy, value transfer, and process efficiency and automation, these properties of decentralized trust and immutable records enable highly scalable decentralization and fractionalization, which fosters co-ownership of both underlying assets and its associated governance structures.
"One of the most fascinating opportunities about the rise of smart contracts is, that we now have accessible tools to efficiently engineer economic incentives in a cheap and scalable manner, thus democratizing mechanism design. This is truly powerful as, by distilling (crypto) incentives into code, we are now able to treat economics simply as software — allowing us to quickly prototype, beta test and iterate on “economies" (David Dao, 2018 Decentralized Sustainability)
While it was only possible to copy data via the internet in the past, blockchain accelerated the move to an “internet of value”. This enables intangible or tangible assets like currencies, shares, infrastructure securities, data, or obligations like contracts be exchanged, without the need for intermediaries, via the trusted decentralized ledgers opening up to the development of new decentralized economic ecosystems that offers previously left out communities and individuals access to participate not only in the value creation, but also value capture and governance at an unprecedented scale.
Blockchain allows Ostrom´s principles to scale beyond the limits of human personal relationships, enabling the creation and operation of efficient communities that bypass rent-taking institutions and redistribute the rewards of economic efficiencies to the communities and individuals both, depending and effected by the sum of the actions of the collective. A potential David Dao shows by translating Ostroms design principles to "blockchainish":
As the future becomes clear
The emergence of Blockchain technology might mark one of the first occasions in which humankind can altogether work through the tragedy of the commons, and establish a universally accepted means of exchange through which the prevalence of an actor to destabilize the wider system is minimized. It offers potential in building collaborative platforms and network systems, which is key in achieving the needed coordination and system integration or lack thereof, sitting at the core of issues related to sustainability.
When you realize the failings & embedded inequity in legacy systems, and the improvements crypto provides, the direction of the future becomes clear..
The possibilities can be glorious or dystopian, but it's our (somewhat overwhelming) responsibility to build this new world in a way that can be equitable for all. We are very excited to be able to figure that out together with our fellow Pozzle Pioneers 👨🏾🚀 and create a platform utilising blockchain that can facilitate a whole universe 💫 of miracles of the commons ✨
Sources & Additional Reading:
The trust machine | The Economist
Tragedy of the commons impact on sustainability issues | Alexandra Spiliakos, Harvard Business Review
Tragedy of the commons is a false and dangerous myth | Michelle Nijhuis, Aeon
Decentralised sustainability | David Dao
International year of creative economy sustainable development | UNESCO
Governing the commons: The evolution of institutions for collective action | Ostrom, E., Cambridge University Press
 | A guest post by
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Love it! The possibilities are endless, let's hope there are many good minds out there!