DAOs as governments

Starting a government today from first principles might look a lot like a DAO. Blockchain could be used to build a trusted foundational layer for key functions of a society like voting, property rights, identity, money, and taxes. Today, the basic functions of a democratic apparatus like vote counting, tax collection, and the administration of property rights are constrained by trust and mired by manual operations like paperwork, signatures, and an enforcement system built around judges resolving disputes after they happen instead of making them impossible in the first place. Blockchain allows us to build a more trustworthy system with lower friction at each step, fundamentally changing what is possible and what we can expect from our democracy. Property rights, voting, and money are examples of systems that could be redesigned in a society built on blockchain and DAOs.

A blockchain-based property rights system can enable properties to be bought, sold, financed, and used as collateral in a transaction that takes a few seconds, instead of relying on a process that takes weeks and depends on intermediaries like brokers and banks who take hefty commissions along the way. The current system of recording property ownership through a county recorder is more expensive and less secure than a blockchain, relying on paperwork, signatures, stamps, notaries, and litigation when something goes awry. The entire $28 billion title insurance industry is built around protecting against forged or defective land titles, a testament to the shortcomings of a system that would simply be made obsolete in a world with blockchain-based property rights.

Blockchains lower friction to tallying votes and moving money, enabling micro-democracies to emerge and provide more frequent opportunities for community input. Participatory Funding enables people to express preferences for how to use a budget, empowering voters to fund smaller-scale local infrastructure improvements that may be otherwise neglected. Blockchains can also increase trust and lower costs when it comes to running an election, which is expensive, cumbersome, and fraught with mistrust in a hyper-politicized environment where the legitimacy of every outcome is questioned. A blockchain can guarantee vote counting is non-partisan and curtail corruption in environments where authorities aren't trusted to count the votes properly. For example, a blockchain system can be designed to be coercion resistant and independently verifiable, allowing any curious observer to tally the number of votes for each candidate and have confidence those votes were cast by real humans, using zero knowledge cryptography to avoid revealing who voted for whom. An important caveat is that for blockchain voting to work, people need a secure method of identity verification and a way to interface with a blockchain like a cell phone or a trusted computer system. While blockchain as a technology can be helpful, it's not a panacea since corrupt institutions can certainly find a way to exploit the system. In sum, blockchains can guarantee vote counting is non-partisan, reduce the cost of running an election, and curtail corrupt vote counting, though many of these promises require widespread access to technology that makes it possible to interact with blockchains.

Blockchain and DAOs have a lot to offer in terms of creating a safe, stable currency. The original cryptocurrencies like Bitcoin were subversive ideas in that they decoupled currency, traditionally a state monopoly, from the state itself. This increased individual freedom, for example allowing millions of people in Argentina to store money in Bitcoin or stablecoins like USDC instead of watching wages disappear due to hyperinflation. Many countries lack a stable currency but are cautious of handing over monetary sovereignty to the United States. A DAO could steward a stable currency where each country has a right to vote in how the currency works, for example, if one country would like to increase the supply of money to ease the economy, they would just need support from a majority of countries to do so. This approach preserves some control of monetary policy and allows flexibility when the collective agrees, all while preventing individual politicians from making short-sighted decisions for quick political wins at home. The eurozone operates somewhat like a DAO, which each country having a seat at the table in the governance of the Euro but not an overpowering influence. This has succeeded in preventing any single country's government from recklessly tampering with the currency supply at the expense of its citizens' savings.

Beyond efficiency and reducing bureaucracy, the deeper value proposition of DAOs and blockchain is trust. As we face issues like inflation and partisanship that threaten to destabilize democracy, blockchain-based systems offers a trusted, verifiable foundational layer. DAOs offer a mechanism to create more pluralistic societies, and have the potential to safeguard our institutions. While it's possible that the governments of today will look to blockchain technology to solve some of the biggest problems of our time, in his book The Network State, Balaji Srinivasan envisions a future where internet communities start entirely new societies, crowdfunding land and creating their own currencies. However it happens, it seems inevitable that the governments of tomorrow may look more like DAOs.