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Democracy on the Chain: Politics2.0

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Satoshi&Co Daily Crypto Newsletter

May 21 · Issue #180 · View online
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Check out past issues of the newsletter along with more interesting crypto content as well as our recently-launched podcast series with leading crypto industry participants at our newly-launched website

(Listen to our latest podcast here. It is with Sandeep Nailwal of Matic Network, which is a layer 2 protocol working on ETH’s Plasma. Matic Network recently finished a successful launch on Binance Launchpad and is also the first Indian crypto startup to receive funding from Coinbase Ventures).
As many of you might be aware, the largest electoral exercise in the democratic world ended earlier this week, in India. Consider the statistics, 900 million voters, spread over an area of 3.3 million sq km, exercised their franchise over a period of 6 weeks. The Indian constitution stipulates that no voter travels for more than 2 km, so a set of Govt officials carried a voting machine and other polling booth paraphernalia to the middle of a national park, a protected wildlife area for one voter. Another small group of voters were in the inhospitable (but incredibly beautiful) Himalayan plateau of Ladakh. The elections again emphasize an oft missed insight about India. It is very similar to Europe, it is truly a subcontinent with a collection of different ‘mini-nations’, albeit far more integrated than these were even a couple of decades ago.
One of the defining features of the campaign leading up to this election has been the bruising, often polarizing nature of the campaign. Especially in an era where social media giants from the Valley disproportionately affect outcomes and reinforce pre-existing prejudices and biases in decision making and opinion forming, whether through default or through design, this is not a problem that is unique to the Indian context. The effect is however magnified in India for a few reasons; the relatively high density of mobile penetration, especially within the maximum population sub-35 age group cohort, the popularity of apps such as Whatsapp, and facebook and lastly, the willingness of campaign strategists to exploit social media to swing public perceptions, sometimes often pushing boundaries into the grey. Add to this the increasingly high level of voter participation as well.
There are two key groups contesting the Indian election. The incumbent NDA, once the great saffron hope, has been relentlessly accused of polarizing the debate by pandering to the worst form of majoritarianism. The opposition UPA is in complete disarray, united by only one thing, the overwhelming desire to root out the incumbent and come back to power. There are key electoral issues that will affect the fate of a fifth of humanity - economic growth, climate change, healthcare, education, human development indices….however the dialogue and the discourse, aided by a pliant, puissant, feckless media has been around trivialities and irrelevant aspects, mostly limited to personalities. Early exit polls predict an incumbent NDA win, but accusations are already propping up that the elections may have been won, but the campaign has been lost, thanks to the level of polarization that preceded the elections. For the record, certain publications (Economist, CNN, Guardian) the bulk of the western media titans, perhaps because of the type of writers they have articulating their view are centre/left of centre, often in a manner that completely misses the dominant pulse of the nation, but that is another polemic digression.
The above situation is actually ripe for a third front, that is fundamentally not aligned to either of the above camps, and charts a new course. Sporadic attempts to do this have fallen flat for multiple reasons. In this edition of the newsletter, we explore the possibility of how a decentralized framework might improve upon existing democratic electoral processes, how such a framework might lead to more accountability in decision making, and how even the electoral process can be simplified, made more efficient, effective and dynamic.
How would a Valley or a Bangalore or a Tel Aviv entrepreneur approach the problem space. We hazard a guess with one approach. The first step is to agree upon version 1 of a framework for Politics 2.0, through an RFP, or indeed, to be with the times, a white paper. Similar to what a protocol lays out, the white paper would lay out the core rules of the Politics 2.0 protocol. How a political party or a person or indeed an entity that has sufficient collective intelligence (either artificial or natural) can implement the Politics 2.0 framework to campaign for the right to make decisions for a set of stakeholders, in this instance, geographic, but theoretically, across any other variable that can form a demographic cluster. 
A good first step could be a DPOS (delegated proof-of-stake) algorithm, which is used in blockchains like EOS. There are pros and cons to one person-one vote versus one token-one vote, but let us hold closed the door to that rabbit hole for now, with a promise to visit it later. The advantages of Politics 2.0 is the following.
Let us call the candidate (or the candidate entity) the ‘Delegate.’
  • Broad framework (core non-negotiable) with allowances for individual modifications. Framework can convert everything from campaign messaging, funding, post election governance. Most importantly, the protocol itself is dynamic and the stakeholders can collectively and continuously update it, as required
  • Periodic reviews - does not need to be locked in for five years - If KPIs not met, stakeholders can vote out the *Delegate*
  • Aligns incentives - Politics affects you even if you do not care about it. Those who want to vote can obviously act as stakers/validators for folks that don’t have the willingness or the ability to vote, and could be sufficiently rewarded, either monetarily or through influence in policy design, agenda shaping
  • Allows for a diversity of views to co-exist without a ‘first among equals’, which inevitably leads to a personality cult, as we see in numerous examples in the democratic world. For even the wisest human, power corrupts, and absolute power corrupts absolutely. In the EOS DPoS implementation, for instance, there are 21 delegates that make key decisions. There are criticisms, but this is just the first version, and there are ways to address and tweak the model. This way the true diversity of views in a complex melting pot like the US, India or the EU can be captured
  • Simplifies the process - Instead of this expensive, human-intensive process, voting could happen simultaneously, as long as everyone has access to the internet. Polling could also happen dynamically, and as frequently as the stakeholders desire. This will also keep the selected delegates honest and focused on KPIs to their demographic constituents
  • Most importantly, it converts the dialogue from a digital dialectic with widely separated standpoints along a long spectrum, some of them unbridgeably far apart from each other to one in which there is a gradient of views along the spectrum, each view point differs slightly from the one next to it, and there is space to capture a larger spectrum of opinion. The largest dominant view, even if it is in the minority as a whole, currently sets the agenda. This is a key flaw in most modern democratic systems
  • Cheaper, faster and transparent, no scope for ‘funny money’ to enter the system
Politics cares about you, even if you do not care about politics.
Politics 2.0 make sure that once the baseline ‘constitution’ is set, everything else is inherently designed to be a process of designed discovery and debate. It leverages the ‘hive brain’, the wisdom of the crowds. It could even have space for a’queen bee’ , who is again selected through the process, if required.
There are quite a few reasons something like this may not happen immediately, or even in the near future. For one thing, vested interests have too much at stake to give up personal power. For another, it will take some more time for decentralization as a concept to truly seep in and permeate mass collective consciousness. However, there is ample space for pilots in smaller settings to try this out. Immediate applications could even be in corporate settings.
It is especially important to have such conversations in countries like India and others where there is a real risk of a descent into the middle income trap, there is huge exposure to externalities like extreme weather and global warming, there is huge strain on the riverine systems for water, and where the demographic boon (a good chunk of which is delivering food, driving cars or answering customer support, thanks to global FDI flows!) could very well become a demographic curse.
Meanwhile in Crypto Wonderland....
“Crypto Bill Pushed To the Upper House in Japan”
The Japanese House of Representatives has passed new crypto regulation in the upper house of the National Diet, local news agency Nikkei reports on May 21.The lower house has reportedly moved crypto-related amendments to the existing financial law to the House of Councillors at a recent plenary session. According to Nikkei, the amendments to two of Japan’s financial laws — the Financial Instruments and Exchange Act and Payment Services Act — intend to strengthen local regulations on cryptocurrency trading process. The amendments reportedly extend the regulation by adding legislation for cryptocurrency margin trading.
“Crypto Scams Totaled 27 Million Pounds In the UK”
Scams in Britain involving currencies and crypto assets like bitcoin totaled 27 million pounds ($34.38 million) in the last financial year, with average losses of 14,600 pounds per victim, the Financial Conduct Authority (FCA) said on Tuesday. Reports of scams more than tripled in the year that ended in April to 1,800 as fraudsters often used social media to promote their “get rich quick” online trading platforms, according to an FCA statement.
“NYSE Applies For an SEC Rule Change”
NYSE Arca has formally applied to the Securities and Exchange Commission (SEC) for a rule change that would allow it to list shares in a proposed bitcoin investment trust. The United States Bitcoin and Treasury Investment Trust, managed by Wilshire Phoenix Funds, would invest exclusively in bitcoin and short-term U.S. Treasury securities, according to a filing made by the exchange late Monday. This investment vehicle is a separate effort from the bitcoin exchange-traded fund (ETF) that NYSE Arca and Bitwise are seeking SEC approval to list.
“ABN Amro Shelves Its Crypto Wallet Plans”
Cryptocurrencies have gained tremendous traction and adoption in mainstream culture, with non-financial companies joining the digital race recently. While companies such as Nike and Microsoft have amped up their crypto-investments, some other major financial institutions are moving away from the underlying technology. In fact, an executive of the Bank of America recently stated that BoA did not see any immediate use-cases for the technology. In a similar development, ABN AMRO, a multinational banking institution based in The Netherlands, has canceled its plans to launch its own crypto wallet.
Tweet of the Day
Pomp 🌪
JP Morgan is now putting out reports about “Bitcoin’s intrinsic value.”

Thought it was worthless and had no value according to Jamie Dimon??

Never listen to what a bank says.

Watch what they do.
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