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The Blockchain Paradox

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Pindar Wong is the chairman of VeriFi (Hong Kong) Ltd and a member of CoinDesk’s advisory board. An internet pioneer, he co­founded the first licensed Internet Service Provider in Hong Kong in 1993.

The following article originally appeared in Consensus Magazine, distributed exclusively to attendees of CoinDesk’s Consensus 2019 event.

From ethereum’s conflicted handling of The DAO attack to bitcoin’s block size “civil war,” to the new staking, baking and voting models for upgrading protocols and electing delegates in more recent blockchain projects, “governance” has long been a heated topic in blockchain communities

As pressure for capacity upgrades has grown along with blockchain adoption, communities have struggled to find an idealized “decentralized governance” model for agreeing on code changes and software forks. The difficulty is understandable. After all, the very idea of blockchain governance can seem like a paradox wrapped in a dilemma. The paradox: “How do you change something which is ‘immutable’?”

The dilemma: “In choosing between a hard fork or soft fork: do you split the very value of using a blockchain in the first place?”

I used to characterize the distinct approaches to these fundamental questions as either “on-chain” governance, where code change negotiations are baked into the protocol’s consensus mechanisms (Decred, DFINITY, EOS, Tezos), or “off-chain” governance (bitcoin, ethereum), where upgrade proposals are negotiated offline before being implemented. (Within the latter
camp I also saw further division, as some, particularly in the bitcoin community, forswear any form of off-chain governance at all.)

I say “used to” because I no longer think it’s productive to address this puzzle in purely ‘decentralized’ or ‘governance’ terms. Learning from the confusion and heartache of the past 20 years in which governments – the traditional, offline kind – have struggled to understand who “governs the Internet,” I think we need to change the taxonomy.

I suggest substituting “polycentric” for “decentralized,” and “stewardship” for “governance.”

Decentralized governance: ‘Polycentric stewardship’

While authorities took years to understand what “Internet Governance” meant, billions of hosts and multiple “stakeholders” continued to come online worldwide. This meant that, much like blockchain technology, the Internet had its own “scaling issues.” We didn’t run out of block weight or block gas limit, but we did run out of numbers to name each network interface
(IPv4 address exhaustion).

In addressing these challenges, a complex ecosystem of stewardship emerged, almost organically. The Internet’s governance came to comprise many independent but interrelated groups, each managing the development of distinctly different but equally important protocols.

The Internet Engineering Task Force (IETF) stewarded the core internet protocols that connect hosts on the network (TCP/IP, BGP, HTTPS); the World Wide Web Consortium (W3C) stewarded the standards for the Web (HTML); and the Internet Corporation for Assigned Names and Numbers (ICANN) stewarded the Domain Name System (DNS), to name but a few groups.

Today, the Internet is not a single complex legal protocol agreed to by 195 nation states, but a mix of technical protocols that are voluntarily adopted by over 70,000 Autonomous Systems(AS): each of which independently operates its own network.

This complexity in the stewardship ecosystem evolved as the demand for online commercial services generated it’s many scaling challenges. But while it meant there would be no single centralized body responsible for all the policies and protocols that Internet users’ rely upon, it did leave a concentration of authority within each group. Each organically evolved its own
distinct culture and community norms, its form, to follow its unique function and pursue a common goal of stewarding the development of specific protocols and policy standards.

Together, these groups now comprise a “polycentralized” ecosystem, having many centers. I see blockchain protocol development following a similar trajectory, with complexity growing as networks become more layered (e.g. the Lightning Network), as different consensus algorithms develop, and as different kinds of specific blockchain hardware such as hardware wallets are deployed. While it’s true that the overall blockchain ecosystem is “not centralized” – that it lacks an overarching center of power or control – I would argue that it is already polycentralized.

As such, it’s not helpful to fixate on a “decentralized” ideal.

Immutability and immunity

How then can we also frame and simplify reasoning about the different roles, and complex interests, within a single family of blockchain protocols? For example, between bitcoin’s multiple stakeholders: developers, exchange operators, full-node operators, miners and end-users.

One lesson I learned from helping organise the 2015 “Scaling Bitcoin” workshops was that thoughtful protocol designers gave careful attention to the overall sustainability of an immutable blockchain. They sought to address not only classic computational “space and time” tradeoffs, such as how to process an “optimally malicious block,” but also more specific concerns with how transaction costs are externalised to the network — for example, how to manage the unspent transaction output (UTXO) set.

In 2016, I shared my learning at the MIT Bitcoin Expo, but at that time I still felt that the rough and tumble of divisive debate and stressful challenges to the network would only make the bitcoin protocol and community more robust and immune to future challenges. Drawing parallels with the evolution of biological systems and the herd immunity they develop in response to persistent threats, I concluded that bitcoin’s “antifragile” framework was working.

Unfortunately, I didn’t then have a more thorough way of reasoning what a “healthy” – i.e. sustainable – network should look like. There was no mathematical theory for measuring an ecosystem’s sustainability. So, I wasn’t seeing the overall picture and missing some of the ecosystem’s more fundamental governance challenges.

I now believe that the foundational work of Nobel economist Elinor Ostrom and euro architect Bernard Lietaer, both recently deceased, may point the way forward, to better frame discussions so that we can ask the right questions at the right time, measure what should be measured and respond accordingly.

Blockchain: A common-pool resource

Ostrom, who passed away in 2012, studied what economists call ‘common-pool resources’ (CPR), such as pastures for grazing or water for irrigation, all of which risk contention and overexploitation if overused. I think it is helpful to consider blockchain transaction capacity, the blockchain itself, and other related resources such as computation power in the same vein, as CPRs.

Before Ostrom’s research, it was thought that the only way to sustainably steward such resources was either by establishing private property rights or with government regulation. After studying hundred of cases of sustainable CPRs worldwide, Ostrom found that complex systems aren’t necessarily “chaotic” by default. She found sustainable CPRs – in Maine lobster fishermen’s common governance of their fishery, for example — and discovered a third way was possible. She identified eight helpful common ‘design principles’ for managing sustainable CPRs, together with two frameworks for reasoning: the Institutional Analysis and Design (IAD) and the Social-Ecological Systems (SES) Frameworks.

I find Ostrom’s frameworks fruitful for thinking about the tradeoffs between different blockchain CPRs: collective bandwidth, memory, disk and computational capacity, etc. Though the mapping is not exact, or one-to-one, I believe it can help future researchers develop common design principles in blockchain incentive design.

Ostrom’s IAD and SES frameworks are not enough alone. They might help us ask the right questions and compare the sustainability of different blockchain ecosystems, but how does one actually measure it for a blockchain network? Here the late Bernard Lietaer has much to offer.

Blockchain: A complex adaptive flow network

Lietaer, who died earlier this year, co-designed and implemented the European currency system’s convergence mechanism, making him, in many respects, a key architect of the euro.

He was a monetary scholar and wrote four books on the future of money. He also did pioneering work in the pre-cryptocurrency field of “complementary currencies” and in 2017 was named Chief Monetary Architect of the Bancor Protocol Foundation, which oversees the ethereum- based Bancor liquidity network for token convertibility.

Lietaer’s definition of money as “an agreement within a community to use something standardized as a medium of exchange” is among my favorites. Most importantly, he and Robert E. Ulanowicz developed a single metric for measuring the sustainability of “complex adaptive flow networks,” such as those that exist in flows of nutrients in nature or financial flows in economic networks.

The practical takeaway from a lifetime of studying real-life ecosystems is that there appears to be only a small “window of viability” between optimizing a sustainable network for greater resiliency and greater throughput. In the case of a “monoculture in money,” the implication is that a small handful of different kinds of money are needed for optimal sustainability.

This bodes well for the wider adoption of cryptocurrencies.

A new rulebook

Like a sixth sense, I see ‘dead’ governance models everywhere, all laid waste by the collision of two worlds: the world of borderless networks, as embodied in the Internet, and the world of bordered nations. From Facebook’s crisis, which prompted its CEO to cry that “The Internet Needs New Rules,” to the UK’s Brexit crisis, it’s clear that a new stewardship rulebook is required.

With their capacity to automatically enforce rules across a borderless network, blockchain protocols offer potential solutions to these deep-seated problems. But if their own governance challenges prevent them from scaling beyond their current capacity limits, that opportunity will be lost.

When addressing such challenges, we need to design blockchain ecosystems as sustainable common-pool resources. It’s this third-way approach to negotiating complex competing interests – neither chaos nor centralized control – that will allow blockchains to sustainably scale into becoming a vital element of humanity’s economic future.

Our future is decentralized not disorganized, our future is polycentric

 

source:coindesk.

 

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Draper Venture Network Selects Blockchain-Focused Venture Studio, GHV to Join DVN Beta

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LOS ANGELES (May 22, 2019) – Goren Holm Ventures (GHV), a fintech and blockchain-focused venture studio based out of Santa Monica, California, has joined Draper Venture Network’s DVN Beta program.

Founded by legendary venture capitalist Tim Draper, DVN currently comprises of 24 VC funds that operate in 60 cities globally and  collectively manage over $2B in assets under management. It is a global, self-governed organization of independent venture funds that cooperate on investment diligence, marketing intelligence, corporate relationships, and co-investments. The DVN Beta program focuses on supporting budding VCs and exposing them to the world’s best investors and investment infrastructure.  It is also meant to be a testing ground for first-time funds and alternative funding models.

“We are thrilled to bring in GHV as a member fund,” said Tim Draper, Founder of Draper Associates and Draper Fisher Jurvetson. “Josef and Alon have a great reputation for networking and inclusion. We are confident that they will be a great source of deal flow and wisdom to the network. We look forward to working with their team and their portfolio companies going forward.”

By joining DVN Beta, GHV accesses a global nexus of business development

opportunities and tech hubs with a local footprint in emerging economies around the world.

“GHV has amassed an incredible, global platform,“ says Gabe Turner, DVN’s Executive Director“By providing strategic introductions and access to partner funds, corporate partners and industry leaders, we will bring visibility and scale to their portfolio.”

GHV’s portfolio companies also benefit through this partnership by gaining access to a worldwide network of capital and expertise while procuring entry into localized private events and exclusive gatherings.

“As a former DVN portfolio company CEO, I had access to DVN’s incredibly powerful, global network and private events,” said Alon Goren, Founder of GHV. “Later as a venture partner for one of their funds, I experienced just how valuable DVN can be from the other side of the table.  When we decided to formalize GHV, Gabe and Tim were our first call, and we couldn’t be more thrilled that they asked us to join them.”

The partnership will deliver more exposure to early-stage blockchain and crypto startups for DVN, as well as provide GHV with a larger global entryway for investment opportunities.

“We are humbled and excited to gain access to a vast network of funds and resources that not just GHV, but also our portfolio companies will benefit from directly,” said Josef Holm, Founder of GHV.  “This takes our strategy of amplifying and exposing the work of the best blockchain entrepreneurs in the world to a whole new level.”

About Goren Holm Ventures (GHV)

Goren Holm Ventures (GHV) was founded in 2018 as a limited partnership between founders Alon Goren and Josef Holm. The firm has evolved to a venture studio, accelerating six startups and incubating 3 more, while simultaneously producing the premiere blockchain and cryptocurrency events in the Los Angeles area, Security Token Summit and Crypto Invest Summit. Sponsors for GHV events have included American Airlines, tZero, and eToro, and prior keynote speakers include Steve Wozniak of Apple, Anthony Pompliano of Off the Chain Podcast, and Shruthi Rao of Amazon Web Services. More information can be found at GorenHolm.com

About Draper Venture Network (DVN)

Starting in 1990, Draper Venture Network has grown into a self-governed organization of independent venture funds on four continents who cooperate on investment diligence, marketing

intelligence, corporate relationships, and co-investments. Draper Venture Network is a robust venture collective that brings together experienced investors with innovative entrepreneurs from around the globe to share strategies, source opportunities and create value. All member funds maintain independence while raising capital and managing investment decisions. More information can be found at DraperNetwork.com.

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Blockchain Platform For $100 Billion Luxury Brand Comes to Life Abeer Anwaar May 21, 2019

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Luxury brand conglomerate, Louis Vuitton and Moët Hennessy otherwise known as LVMH, has stepped into the blockchain space as it announced to launch a blockchain-powered platform, Aura, for authenticating high-end luxury goods.

LVMH, the owner of the iconic Louis Vuitton label, controls over 60 luxury brands across various categories like watches, jewelry, perfumes and cosmetics, fashion and leather goods, selective retailers, even wines and spirits.

The group reported revenues of $53 billion in 2018 only, in addition to Louis Vuitton, another LVMH brand Parfums Christian Dior, has struck a partnership with the blockchain software technology company, ConsenSys and Microsoft for their blockchain endeavor. LVMH recruited a full-time blockchain team, which purportedly has been operating in secrecy for over a year now, working in alliance with ConsenSys and Microsoft Azure.

READ ALSO: Ivy League Professor’s Crypto Has the Solution to Blockchain Scalability

The partnership resulted in the platform named, AURA, a cryptographic provenance platform specifically designed to serve the entire luxury industry with powerful product tracking and tracing services. According to the press release:

AURA makes it possible for consumers to access the product history and proof of authenticity of luxury goods — from raw materials to the point of sale, all the way to second-hand markets.

AURA is a new blockchain, based off of the permissioned version of the Ethereum blockchain, called Quorum. Designed through JP Morgan’s partnership with the Ethereum Enterprise Alliance, Quorum specifically focuses on data privacy as well as transparency.

READ ALSO: JPM Coin is the Evidence of Trust in Blockchain Technology

The technology can store unique information about every product stored on a shared ledger and customers are then able to use the brand’s official application to obtain a certificate, offering details about its background. According to reports, AURA will also offer ethical and environmental information, instructions for product care and warranty services. It is expected to go live later in May or June with Louis Vuitton and Christian Dior initially, however, it will be extended to LVMH’s other 60-plus luxury brands and eventually those of its competitors.

READ ALSO: “Blockchain is Useless” Crypto Community Reacts to CTO’s Remarks

The team behind AURA hopes that in the near future it will be used by rival luxury brands as well, which will enable them to offer tailor-made services and strengthen customer loyalty. According to Ken Timsit, managing director of ConsenSys Solutions:

AURA is a groundbreaking innovation for the luxury industry. ConsenSys is proud to contribute and to work with LVMH on an initiative that will serve the entire luxury industry, protecting the interests, integrity, and privacy of each brand.

Although not much was revealed regarding the platform but it is expected that AURA will be used to prove the authenticity of LVMH’s luxury products, allowing for the tracking of origins to the point of sale. The second stage of the project, according to reports, will explore the protection of creative intellectual property, in addition to exclusive offers, events for customers and anti-advertising fraud.

READ ALSO: Coffee Over Blockchain – Starbucks & Microsoft Tracks Production

However it is not the first to propose the idea of an authenticity-tracking blockchain, there are other luxury brands provenance platforms out there. The French startup Arianee claims to be building perpetual relationships between brands and owners made of trust, respect and transparency. The startup boasts former employees and advisors from luxury brands such as Tiffany’s, Omega, Balenciaga and the Richemont group.

READ ALSO: PepsiCo Gets 28% Efficiency Boost Through Zilliqa Blockchain

The team behind Arianee created a new blockchain, which was a copy of Ethereum, thus combining both permissioned and permission-less elements through its use of a consensus mechanism, it’s calling “proof-of-authority.” It is permissionless in the sense that users who are interested in selling their products to one another can interact with the blockchain, but the verification of the ledger and issuance of new tokens is controlled by the participating businesses.

Furthermore there have been other high-end brands that are turning to blockchain technology for the reason of provenance. Recently, the premium scotch whiskey brand Ailsa Bay, which is owned by William Grant & Sons (WG&S) and has yearly revenue of about $80 million, was in the news for releasing world’s first scotch whisky tracked with a blockchain-based system.

READ ALSO: Pharma Meets Blockchain – Solution to $450 Billion U.S. Industry

 

source:coindesk

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Blockchain group in New Zealand requests official govt blockchain strategy

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Blockchain NZ the New Zealand based blockchain industry group, announced that they are requesting a national blockchain strategy from the government, according New Zealand news outlet Scoop Independent News.

Mark Pascall, the executive director of Blockchain NZ is set to give a presentation next Thursday to the New Zealand parliament’s economic development, science and innovation select committee hearing on potential economic advantages of implementing blockchain technology solutions in New Zealand.

The presentation is set to just be an introductory seminar that will feature blockchain, Bitcoin, smart contracts, security tokens, and decentralized autonomous organizations. Pascall spoke further in depth on his mission for blockchain in 2019 and what this presentations purpose is:

“So, we really want government to take blockchain seriously and produce a strategy. We can help them with that so we strike a balance between trying to plan for an unpredictable future and taking some action so we realize huge potential economic benefits for the country.”

Blockchain NZ consists of an array of blockchain oriented businesses, organizations and experts, first formed in 2016. Blockchain NZ is working toward getting New Zealand to join the likes of other countries that have national blockchain strategies implemented.

Source.chepicap

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