Commons Based Economy

If “software is eating the world”, then the means of producing that software will come to define the new epoch. Proprietary software and walled gardens controlled by corporate entities represent the transfer and emulation of industrial era practices into the “digital economy”. Top-down control within the corporation means that the constraints of profitability are imposed above all other considerations. As the role that some of these big tech companies fill has become more like the provision of important public utilities, it has become clear that they are generally not very good at performing this role. The frequency of damaging hacks and misuse of data is testament to this.

Commons-based peer production is native to the internet, it represents the way in which people can efficiently work together on a larger goal when communication costs are reduced to effectively zero. It is an excellent choice for the production of non-rival goods, where use by one party does not restrict use by others. With present levels of communications technology the category of non-rival goods has expanded to include all software, digital media and information resources.

Blockchains are a new kind of commons, bringing together permissionless access with digital scarcity to create money and other assets that are globally accessible and easily transferrable. The blockchain commons is made with FOSS, and can only be made with FOSS. It puts open source software development projects at the centre of important global networks providing valuable services.

Some blockchains can fund their own development, they are self-sustaining digital organisms, incentivizing participation by all of the constituencies of contributors that they need to survive and thrive. Blockchains that have resources to fund their own development tend to conceive of this quite broadly, going beyond the writing of code to incorporate a variety of other activities which work towards the project’s aims.

The aims of these projects go beyond producing good software, often involving grand ambitions to fundamentally change how people conduct aspects of their lives, or modify aspects of the socioeconomic system. This means that the funding these projects dispense goes towards a range of activities which will strengthen their commons in a variety of ways.

This is a novel funding mechanism for commons-based peer production, which outside the domain of FOSS has been even more hampered by the difficulties of funding the production of public goods.

DAOs are an effort to build methods of coordination into the commons, they are commons-based organizations that can be trusted to implement the rules of decision-making in the way that has been agreed by all participants. This idea has the potential to transform our capacity to organize by minimizing the transaction costs associated with doing so, improving efficiency and diminishing risks when collaborating with people who are relatively unknown (and therefore untrusted).

So far however this potential is a distant possibility, with clunky user experience, flawed structures, and high transaction fee costs have limited most of the DAOs which have been created so far to the status of curiosity or failed experiment. Popular DAO forms are all about allocating capital or funding, when they work well they are like more elaborate multi-sig wallets.

DAOs for looking after blockchain networks, where they are endowed with ongoing block rewards, inherit the longevity of their blockchains. Where there is a significant flow of funding, you can be assured there will be at least some people around to allocate and claim it. The only outright failures occur when virtually all participants choose to abandon the network, which usually comes after a slide into irrelevance. The success stories will be unstoppable, and could be highly significant, but I’m still waiting to see what that kind of success looks like.