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bitcoin users must make available computing power to the bitcoin users’ community so that everyone can ‘see’ the Ledger, in order to ensure perfect community ownership of the transactions’ record, as opposed to trusting some government agency (e.g. the Fed) or some private corporation that may have its own agenda.

Lastly, to cap the supply of bitcoins, and thus safeguard their value, the algorithm guaranteed that the maximum number of these strings, or bitcoins, could only grow (given the algorithm’s structure) to 21 million units by the year 2040. Once it reached that quantity, its ‘production’ would cease and the users of bitcoins would have to do with these 21 million units.

the new currency on the basis of faith in the crudest version of the ‘monetarist’ Quantity Theory of Money (i.e. the idea that the value of money depended solely on the quantity of money supplied to the public) and, thus, aimed at creating the digital equivalent to… gold.

ust like gold, there are two ways in which bitcoins can be acquired: One is to buy them using dollars, chickens, silk, honey, whatever… The other is to ‘dig’ for them like 19th century gold diggers dug for gold. To that intent, Mr ‘Nakamoto’ designed his brilliant algorithm in a manner that allowed for ‘bitcoin digging’.

Moreover, the algorithm was written in such a way as to guarantee a steady ‘production’ of these strings, or bitcoins, over time and in response to the computing power devoted by users in order to help track transfers and, thus, in order collectively to maintain The Ledger.

here are two insurmountable flaws that make bitcoin a highly problematic currency: First, the bitcoin social economy is bound to be typified by chronic deflation. Secondly, we have already seen the rise of a bitcoin aristocracy

First, deflation is unavoidable in the bitcoin community because the maximum supply of bitcoins is fixed to 21 million bitcoins and approximately half of them have already been ‘minted’ at a time when very, very few goods and services transactions are denominated in bitcoins.

Can these two flaws be corrected? Would it be possible to calibrate the long-term supply of bitcoins in such a way as to ameliorate for the deflationary effects described above while tilting the balance from speculative to transactions demand for bitcoins? To do so we would need a Bitcoin Central Bank, which will of course defeat the very purpose of having a fully decentralised digital currency like bitcoin.

Secondly, two major faultlines are developing, quite inevitably, within the bitcoin economy. The first faultline has already been mentioned. It is the one that divides the ‘bitcoin aristocracy’ from the ‘bitcoin poor’, i.e. from the latecomers who must buy into bitcoin at increasing dollar and euro prices. The second faultline separates the speculators from the users

; i.e. those who see bitcoin as a means of exchange from those who see in it as a stock of value.

in the case of bitcoin speculative demand outstrips transactions demand by a mile.

the available quantity of bitcoins per each unit of goods and services will be falling causing deflation.

The Crash of 2008 has infused our societies with enormous scepticism on the role of the authorities, both government and Central Banks. It is quite natural that many dream of a currency that politicians, bankers and central bankers cannot manipulate; a currency of the people by the people for the people. Bitcoin has emerged as the great white hope of something of the sort. Alas, the hope it brings to many people’s hearts and minds is false. And the reason is simple: While it is true that local communities have, in the past, generated successful communitarian currencies (that enabled them to improve welfare in their midst, especially at a time of acute economic crises), there can be no de-politicised currency capable of ‘powering’ an advanced, industrial society.

The 1920s thus demonstrates the impossibility of an apolitical money supply. Even though the monetary authorities were insisting on a stable correspondence between the quantity of paper money and gold, the financial sector was boosting the money supply inexorably. Should the authorities stop them from so doing? If they had, the Edisons and the Fords would have never flourished, and capitalism would have failed to produce all the goodies that it did

To the extent that bitcoin attempts to emulate the Gold Standard, if a large portion of economic activity is denominated in bitcoin, the dilemmas of the 1920s will return to plague the bitcoin economy.

The reason that money is and can only be political is that the only way of steering a course between the Scylla and Charybdis of dangerous ponzi growth and stagnation is to exercise a degree of rational, collective control over the supply of money.

And since this control is bound to be political, in the sense that different monetary policies will affect different groups of people differently, the only decent manner in which such control can be exercised is through a democratic, collective agency.

collective-action problem in an open network context

How do you know that a given document, certificate or dataset -- or a vote or "digital identity" asserted by an individual -- is the “real thing” and not a forgery? 

online “ledger” that keeps track of all transactions of all bitcoins

set of transactions known as the “block”

a kind of permanent record maintained by a vast distributed peer network

blockchain technology could provide a critical infrastructure for building what are called “distributed collaborative organizations.”

to give its members specified rights within the organization, which are managed and guaranteed by the blockchain

blockchain technology is not confined to digital currency

reliable systems to manage their inter-relationships on network platforms.

Bitcoin 2.0 projects

a way to create distributed networks of solar power on residential houses

Transactions would be near-instantaneous, and transaction costs would be minimal.

traditional issues related to shared common-pool resources—such as the free rider problem or the tragedy of the commons—could be addressed with the implementation of blockchain-based governance, through the adoption of transparent decision-making procedures and the introduction decentralized incentives systems for collaboration and cooperation.

to reach consensus and implement innovative forms of self-governance. The possibility to record every interaction on a incorruptible public ledger and the ability to encode a particular set rules linking these interactions to a specific transactions (e.g., the assignment of cryptographic tokens) makes it possible to design new sophisticated incentive systems

Decentralized blockchain technologies bring trust and coordination to shared resource pools, enabling new models of non-hierarchical governance, where intelligence is spread on the edges of the network instead of being concentrated at the center

commons-based peer-production communities

have had a hard scaling up, without turning into more bureaucratic and centralized institutions

could overcome many collective-action challenges that cannot be easily solved by conventional institutions today

Who guards the guards? 

blockchain technology does offer more formidable tools for better protecting the perimeter of the commons and for empowering commoners to decide their own fate

the underlying architecture has potentials not only for the future of money, but also for the future of networked cooperation.

Blockchain-based technologies may still have a role to play.

Just as Bitcoin makes certain financial intermediaries unnecessary, new innovations on the blockchain remove the need for gatekeepers from other processes

The broader implication is that the blockchain could support the activities and resources necessary to the commons

A lot of what follows is pretty speculative, but worth discussing in the context of peer-production.

The blockchain is the distributed ledger that keeps track of all transactions made using the Bitcoin cryptocurrency. Arguably this is Bitcoin’s key innovation

the blockchain could support new forms of peer-production, and fully decentralised infrastructures for applications as varied as finance, mesh networks, cloud databases and share economies.

Decentralised Autonomous Organisations.

There are a number of start-ups and groups currently innovating in this space such as Ethereum, Ripple and Mastercoin.

extends the decentralised capabilities of Bitcoin beyond financial transactions

Bitcoin involves two parameters: a trustless database (more on this later) and a transactions system capable of sending value from place to place

Ethereum builds a generalised framework that extends the capabilities of the blockchain to allow developers to write new consensus applications.

Distributed Organisations & the Trust Web:

claim is that blockchain-based technologies such as Ethereum can support and scale distributed forms of cooperation on a global scale.

it doesn’t matter whether I believe in my fellow peers just so long as I believe in the technical efficiency of the blockchain protocol.

Where questions about how to reach consensus, negotiate trust and especially scale interactions beyond the local are pervasive in the commons, the blockchain looks set to be a game changer.

the blockchain could support not only cryptocurrencies but also other financial instruments like equity, securities and derivatives; smart contracts and smart property; new voting systems; identity and reputation systems; distributed databases; and even the management of assets and resources like energy and water.

Cohen and Mougayar have dubbed this innovation the “trust web”

Ethereum incentivises participation, encouraging actors to contribute without introducing centralisation

Node Incentivisation:

In order to use an Ethereum application, users make micropayments to the developers in ether, Ethereum’s coin, or ‘cryptofuel’ as they term it.

Monetary transactions aside, this encourages people to contribute to the commons and puts systems in place to try and protect its resources from commercial expropriation.

a change to infrastructure

Decentralised Infrastructures:

Instead, we can imagine infrastructure as something immaterial and dispersed, or managed through flexible and transient forms of ownership.

The payoff seems to be that new blockchain-based technologies have the potential to support new forms of commons-based peer production, supplying necessary tools for cooperation and decision making, supporting complementary currencies and even provisioning infrastructures.

Other issues concern the design of trustless architectures and smart property.

Trustless Architectures: First of all, what kind of subjectivity does the blockchain support?

‘trust in the code.’

proof-of-work is not a new form of trust, but the abdication of trust altogether as social confidence in favour of an algorithmic regulation

‘consensus’ algorithms

proceeds from a perspective that already presumes a neoliberal subject and an economic mode of governance in the face of social and/or political problems. ‘How do we manage and incentivise individual competitive economic agents?’ In doing so, it not only codes for that subject, we might argue that it also reproduces that subject

Smart Property:

new controls implied by smart property also have worrying implications

Property doesn’t disappear, but instead it is enforced and exercised in different ways. If rights were previously exercised through norms, laws, markets and architectures, today they are algorithmically inscribed in the object.

There is real potential in the blockchain if we appreciate it not as some ultimate techno-fix but as a platform that, when combined with social and political institutions, has real possibilities for the future of organisation.

Entrepreneurs could sidestep the VCs by turning to a “swarm” of small investors — and maybe supplant the entire VC system. By the end of the summer, he’d raised more than a million dollars in cryptocurrency. The legality of the model is uncertain,

High hopes for a liberating Internet have devolved into the dominance of a few mega-companies and the NSA’s watchful algorithms. Platforms entice users to draw their communities into an apparently free and open commons, only to gradually enclose it by tweaking terms of service, diluting privacy, or charging fees for essential features.

Facebook started flocking to Ello

The line between workers and customers has never been so blurry. Online platforms depend on their users

looking for ways to build platforms of their own.

VC-backed sharing economy companies like Airbnb and Uber have caused trouble for legacy industries, but gone is the illusion that they are doing it with actual sharing.

OuiShare, which connects sharing-economy entrepreneurs around the world

it’s becoming clear that ownership matters as much as ever.

Loomio is now being used by governments, organizations, and schools; a significant portion of the current usage comes from Spain’s ascendant political party, Podemos.

new kinds of ownership the new norm. There are cooperatives, networks of freelancers, cryptocurrencies, and countless hacks in between.

aspire toward an economy, and an Internet, that is more fully ours.

Jeremy Rifkin, a futurist to CEOs and governments, contends that the Internet-of-things and 3-D printers are ushering in a “zero marginal cost society” in which the “collaborative commons” will be more competitive than extractive corporations.

People are recognizing that doing business differently will require changing who gets to own what.

form of ownership

Cooperative intelligence

Occupy’s kind of direct democracy and made it available to the world in the form of an app — Loomio

It’s a worker-owned cooperative that produces open-source software to help people practice consensus — though they prefer the term “collaboration” — about decisions that affect their lives.

Rather than giving up on ownership, people are looking for a different way of practicing it.

Enspiral, an “open value network” of freelancers and social enterprises devoted to mutual support and the common good.

The worker cooperative is an old model that’s attracting new interest among the swelling precariat masses

Co-ops help ensure that the people who contribute to and depend on an enterprise keep control and keep profits

multi-stakeholder cooperative — one in which not just workers or consumers are voting members, but several such groups at once

“It’s more about hacking an existing legal status and making these hacks work.”

Sensorica pays workers for their contributions to the product. Unlike Sovolve, they participate in the company democratically. Everything from revenues to internal criticism is out in the open, wiki-style, for insiders and outsiders alike to see.

Only one device has been sold

Bitcoin

makes possible decentralized autonomous organizations, or DAOs,

The most ambitious successor to Bitcoin, Ethereum,

to develop decentralized social networks,

even an entirely new Internet

Swarm’s competition makes it hard not to notice the inequalities built into the models vying to disrupt the status quo. Bitcoin’s micro-economy holds the dubious distinction of being more unequal than the global economy as a whole. On a sharing platform, who owns, and who just rents? In an economy of cooperatives, who gets to be a member, and who gets left out?

Sooner or later, transforming a system of gross inequality and concentrated wealth will require more than isolated experiments at the fringes — it will require capturing that wealth and redirecting its flows. This recognition has been built into some of the most significant efforts under the banner of the so-called “new economy” movement. They’re often offline, but that makes them no less innovative.

connecting them to large anchor institutions in their communities; hospitals and universities with deep pockets can help a new enterprise become viable much more quickly than it can on its own

Government is an important source of support, too. Perhaps more than some go-it-aloners in tech culture might like to admit, a new economy will need new public policies

The early followers Francis of Assisi at first sought to do away with property altogether

There are many ways to own. Simply giving up on ownership, however, will mean that those who actually do own the tools that we rely on to share will control them.

changing what owning means altogether.