February 22, 2016
Bitcoin and blockchain have been making headlines around the world for a while now and today, we will be adding another one. This time, the highly debatable cryptocurrency and the trending distributed ledger technology got their hands into politics in Australia through the Flux Party, a new political entity that aims to introduce a token-based political system powered by blockchain technology.
According to Reuters, the new Australian political party is using the virtual currency Bitcoin as a model to replace what they say is an outdated political system—representative democracy—with a streamlined new polity for the information age.
What is Democracy 2.0?
Let’s start with the basics—by understanding what Democracy 2.0 is and how it is different from the existing one.
The power of Democracy 2.0, according to The Huffington Post, is in integrated human networks. New democracy takes a bottom-up approach, providing the power to affect the actual decision to people who can make knowledgeable decisions.
Integrated human networks will exist in two ways. Like-minded people will be able to connect and collaborate in order to affect legislation. And secondly, voters will be integrated with all levels of the system. The fact that votes can be traded with those who can make better decisions is both a plus and a possible minus. On one hand, professionals in economics will be able to make weighted decisions. On the other hand, it is possible that votes can be consolidated in the hands of a limited group in a beneficial trading.
A politician in Democracy 2.0 is essentially a puppet as he follows the will of the voters directly with no personal impact at all. The politician in the new system is not making any decisions anymore. A single person can be simultaneously involved in decision-making at any level and in any elective question. It gives back to the people the power to have an actual impact on the government's legislation that will eventually affect one’s life.
No politician can have all the answers to every question—it is one of the underlying ideas of Democracy 2.0. Even a group of highly intelligent senators can’t have all the answers and all the knowledge to make the most optimal decision.
The other problem Democracy 2.0 solves is the problem of power and ego. It is known from history that whenever the crowd takes control in a violent way, the old system replicates itself as the new power elite seeks to maintain its position. It is a vicious circle based on a desire to hold power. In Democracy 2.0, the politician has no power, the masses do. Hence, there is no need for a violent turnover of the system to gain control and no power is held by those in authority.
The very idea of Democracy 2.0 perfectly corresponds with the idea behind a distributed ledger. There is no central authority and every unit has power.
Now let’s move from the concept to the application that is rolling out in Australia.
How is the Flux Party Democracy 2.0 going to work?
The Flux Party claims to be very different from traditional political parties as it won’t have any policies. The legislation will be supported or blocked by the members who will be able to trade their votes for every bill online.
The new party’s co-founder Max Kaye shared with the news source a controversial statement about the way he sees politicians, "If they didn't have to be senators, if they could just be software or robots, they would be because their only purpose is to do what the people want them to do."
Blockchain-based voting with bitcoin-like tokens eliminates the friction that usually exists between the voters' desired outcome and the senators’ decision. If the votes among members have been distributed in 70/30 proportion, the same proportion will have to be represented among senators’ votes, which creates a perfectly democratic system with no place for a human/political factor.
The Flux Party filed the registration papers with the Australian Election Commission in January after it received the support of more than 550 registered voters. The new party's official website currently counts its membership at 1,009 people.
The good part of the blockchain-powered Democracy 2.0
It is not actually just about the democracy. The hallmark of political systems around the world is a lack of trust and the gap between what’s desired by the population and what seems to be the best for politicians. The Australian blockchain-based democracy eliminates this hallmark by building trust through ease of verification and by removing human frailty from the equation, as the bitcoin expert at the University of Technology Sydney, Dr. Adrian Lee, shared with Reuters.
Regardless of the technical complexity behind the proposed system, the idea is very simple. When the time of voting comes, each member receives bitcoin-like tokens that the voter can either use himself, trade them or delegate to a trusted representative to vote for the token owner. It is a fairly simple idea that seems to give complete control over outcomes of elections to the party members.
Another important thing about the blockchain-powered Democracy 2.0 is that competent people can finally have real power over the decisions that matter. Senators are often entitled to make decisions regarding questions that are out of their domains. Hence, such decisions can’t take into account all possible outcomes that a specialized professional in the area would know. A new voting system will enable voters to entrust the decision-making to those who understand the most about the subject. It is hard to underestimate a positive outcome when only experts in a certain segment have the power to make a decision about it.
Supporting the idea, Kaye commented, You get sick, you go to the doctor, right? You don't self-diagnose and you don't go and call your plumber."
At its core, the new democracy offers to remove a human politician with a bitcoin machine. If implemented, it will be the first ever political system working on blockchain and bitcoin.
The bad part of the blockchain-powered Democracy 2.0
While democracy seems like a wonderful system if there is frictionless execution, the idea of taking it to the next level with blockchain and bitcoin may have certain negative outcomes as well.
As Dr. Adrian Lee noted, there is no legal binding for senators to vote as directed by bitcoin machines. To ensure the new democracy works as expected, the party will have to develop a legislative base that will obligate senators to vote as decided by the members. As with any legislation, it seems like a time-consuming and very complex effort.
As we have mentioned previously, the bitcoin votes can be traded and resold, which may end up in replicating the same system where a small group holds the power. There is no legislative boundary that could stop the consolidation of votes in exchange for money. Moreover, in case someone is voting himself, there is a way to track the vote, which de-anonymizes the person voting with bitcoin-like tokens and in the most extreme cases, may expose the voters to danger.
Another science professional, Peter Chen, a senior lecturer in politics at the University of Sydney, made a fair critical comment to the news source, "They're just the modern version of something that's always been around: utopian political system designers. They're obviously guys who are really focused on the tech thing and that has always been the problem with the e-democracy people. They're often really tech-driven and they need political scientists at the brainstorming floor to say 'well, I don't know if that'd work'."
Another debatable question is related to the level of macro-vision that the masses can have versus the vision of a senator. While the population is most concerned about a single human’s well-being, it may not see the big picture and the long-term outcomes of the decisions that were taken to reach short-term (and, probably, materialistic) goals.
There is another Democracy 2.0 rising on the other side of the globe
Meanwhile, another country on the other side of the globe has recently taken a step towards adopting blockchain-based voting.
Less than a week ago, Nasdaq and the Republic of Estonia announced that Estonia’s e-Residency platform will be facilitating a blockchain-based e-voting service to allow shareholders of companies listed on Nasdaq’s Tallinn Stock Exchange, Estonia’s only regulated securities market, to vote in shareholder meetings. The country’s e-Residency platform is an electronic identity system used by both Estonian residents and those with business interests in the country to access government services through e-Residency’s digital authentication.
As part of the program’s pilot, shareholders who are Estonian or Estonian e-residents will be able to participate in the corporate governance of companies more conveniently and securely than ever before. The e-Residency platform vastly improves the ability to authenticate shareholders for the e-voting service while blockchain technology will allow votes to be quickly and securely recorded, streamlining a proxy voting process that has historically been labor-intensive and fragmented. The pilot is aimed for launch in 2016.
While Nasdaq’s pilot is not exactly touching the political system, the underlying idea is the same and can be applied to any kind of voting in the future, including elections.