The Necessity of Open Systems

by Juan F. Lam

May 4, 2021

#blockchain #governance #community

Note: This is a living document, which means that I might update it as more things come to light or new developments are made.


We, as a society and as a generation, are on the cusp of a subtle and profound change. We are living in a time of maximum potential energy -- do you feel it? It is the year 2021 and we are recovering from a global pandemic which has shifted the way we live, the way we communicate, and the way we do things in a very fundamental way. And through it all, there was one major lesson learned -- when things go wrong, it is our infrastructure, our systems, which will make or break us. Within mere weeks, we were capable of adapting to what otherwise would have been a devastating blow to our everyday lives through the power of technology. Education, work, and even museum visits all happened through Zoom which, while not ideal, is far better than not having any of those things at all. What was proven is that, if rightly applied -- we can leverage infrastructure and technology to achieve great things.

We are living in a time of change; we are at the meeting of the wind and rain that forms the first whisps of a hurricane. But these are merely raw components. What shape will this potential take? Time will tell for certain, but it will take some shape. Someone will shape it because that's what humans do. It is our most impressive ability -- that we can give shape, individually and collectively, to shapeless things.

What follows is a vision, not for the shape of what is to come, but a way to give everyone a part in shaping it. To offer a path that we can follow to forge a better world. And it all begins with the material at hand. How do we solve the problems of today and grow the world of tomorrow?

The Problem of Trust

When you break down most of the pressing social and political issues of today, the core of the problem is trust. Most people do not trust the institutions we rely on, and upon which most of the United States economy functions, to be fair or to abide by the rules that keep citizens safe.

In 2020 and 2021, we've seen that Americans don't trust Wall Street to play by the rules. They do not trust Law Enforcement to be guardians and not executioners. They do not trust the government's ability to secure a democracy. And that's all in the United States of America, land of the free and the model of democracy. How much worse are the issues abroad? Globally, we face the issue of privacy. From an anecdotal perspective, I would say that most citizens don't even trust the companies and the software we rely on for communication, social activity, and general life operation to keep our data private and secure.

There is no trust, and that is the crux of the issue, because though trust is intangible, it is deeply necessary for any human institution or system to function. How can we restore that trust? How can we hold the leaders of our systems of governance and finance accountable?

In other words, how do we bridge the disparity between the sovereign bodies that affect the lives of millions, and the very millions they serve?

Blockchain: A Mechanism for Trust

When Satoshi Nakamoto set out to create Bitcoin, they were looking to displace the bank with the people. To have the whole of society at an individual level become the guardians of transaction records without the need for a central authority. It's an impressive system, but not solely for its ambition alone -- the underlying protocol of Bitcoin, known as the Blockchain, is an elegant mechanism for trust.

With a blockchain, you don't need to trust an institution to make sure transactions are legitimate because everyone (including you) can verify the information whenever they want. With Blockchain, you can supersede the need for trust. It's trustless. It will programmatically play by the rules, and only a majority of the network, or the society, can change it by democratically choosing to.

Envision a society where you didn't have to trust that your information was safe, that your votes were secure and truthfully accounted for. A society where you could be certain your identity isn't stolen, or that the laws were being followed. It all happens, seamlessly, as per the rules you voted to put in place according to the democratic process. What blockchain technology does is put those things closer within our grasp than they otherwise would have been.

But Not Enough

However, it's not the perfect solution -- blockchain is a technology, not a miracle. What matters most going forward is how we work together to implement blockchain in places where it would truly make a difference. The solutions to human problems require human effort. Technology cannot solve our problems for us. But we can use it as a tool to help us on our way there. And if the events of the past year have proven anything, it is that the health of our technological infrastructure is tied very tightly to our success as a society. For better or worse.

With that in mind, we must be careful not to let intrinsically unfair power-dynamics creep into our systems. Blockchains, though decentralized, aren't necessarily equally fair for all users unless specifically implemented to be so. In other words, unless we make these technological protocols democratic, it's possible that they won't be, and could turn totalitarian or oligarchical. Moreover, there is a danger to a system that programmatically enforces rules. Namely, what if the rules are wrong? Or biased? How easily can we change them? These aren’t secondary concerns — they’re absolutely vital. If we don’t get it right, then we will dig ourselves into a hole and not out of one.

The use of any technology needs a philosophical framework to accompany it, or else it will merely be a husk without a spirit and soon be colonized by the very institutions it seeks to subvert.

Open Source -> An Open Society

Open source software is software that is publically available for review and contribution. That means that you and I can go into a project's public repository and check out how the code works, and contribute features. There's plenty of benefits to open source software: it's secure (many eyes review the code constantly, so it's less prone to massive bugs or breaches), it's low cost (usually free), and typically works on most operating systems.

But that's not why people use it. People use open source software because of their ability to verify the code, customize the code, and propose changes to how it works, if the majority of the community agrees. Most people don't need to, and usually don't, use those abilities -- but it's open to them if they so wished. That is at the core of open source software -- if you wanted to, you could. And because anyone can validate that the software is up to par and does what is intended, you don't need to exercise trust. You can simply rely on it.

What I'm proposing is an Open Society. One in which anyone can participate in the mechanisms that run our world today. A society in which, at any level, citizens could vote for their desired outcomes, see how resources are being managed, and have access to the infrastructure necessary to succeed in a capitalist economy. In other words, I'm a proponent of creating an environment where democracy could thrive at its fullest potential, where all citizens can participate more fully in the capitalist society we live in and engage with their community more seamlessly and transparently. And I propose we do this by creating technological infrastructure that makes it possible.

I believe that corporations, local counties, and governments are all systems that take input (trust, money) and give us outputs (mutually agreed upon value).

In the system of government, the input is both trust and money. We trust the government (subjecting ourselves to its laws) and we pay them taxes. In return, the government promises to provide us with security, law enforcement, legal representation, certain services, and (in democratic societies) the ability to influence the legislature of the government.

As of now, however, the balance of that transaction weighs in favor of the systems, and not the people they serve. Through decentralization and blockchain, we can shift that balance, and we could create a more prosperous and peaceful society. But it starts with giving sovereignty to the people, not systems.

What kind of world is that? What does it look like?

Visions of an Open Society

To believe in an Open Society is to believe that, fundamentally, if people are given the right resources, incentives, and opportunity, they will proactively participate in the building of community welfare. They will engage with the tasks at hand in a productive way of their own accord. Indeed, through the use of blockchain, crypto, and DAOs, we could create communities (even municipial ones) that citizens can invest in and earn from. Thus, the focus of an Open Society is on making sure that all citizens are given those resources, such as accessible, low-cost, and quality education so that they can bolster their own well-being as well as that of the community.

This vision has, at its core, people. Not systems. Thus, it is a vision of a decentralized society where power and the ability to verify its use is in the hands of many and not the few. The soul of this society is trust, and a vital spirit of growth. Where all voices can have an impact, and new ideas can spring forth in compromises and innovations that arise from disagreement. It is a world in which we could verify that our privacy, our identities, our freedom of speech, and our ability to engage with systems is guaranteed.

This is an Open Society. But how can we get there?

Blockchain: The Infrastructure of an Open Society

The invention of crypto and the blockchain have allowed for some incredible innovations technologically so far -- but what would happen if they were applied at scale?

So far, the innovations of blockchain and have largely occurred in the finance space. And though the potential impact could reach far beyond that, it's not a bad start.

Economic Freedom

Cryptocurrency has allowed for the instant, secure, and borderless transfer of value in a peer-to-peer format. The implications are tremendous: you won't need to make a minimum deposit in a bank account because the value of your assets is secured on the blockchain (this is life-changing for people who don't have enough money to even make a minimum deposit at a bank, because it means they can safely store their money and transact it digitally). Moreover, your assets are always accessible to you. You can withdraw or add whenever you want with no limits. If you live in a country plagued by political issues, you don't have to worry that your assets will be confiscated or censored.

Finally, decentralized finance systems allow for anyone to grow their wealth with less paywalls, fees, and transaction time. With the proper knowledge, investing becomes even simpler, and you can do more with your money. You can loan out your money to corporations, peers, or liquidity pools at your own discretion, at your rates, and have those transactions secured and executed by smart contracts (programs built on the blockchain).

It sounds simple, but it's a tremendous amount of freedom, and for many people around the globe, it's more economic freedom than they could have imagined. At its core, the innovation of Decentralized Finance isn't that it changes our financial infrastructure (though it does do that in some capacities). Its chief innovation is that it gives anyone with a phone and an internet connection access to a free, worldwide, and secure financial infrastructure. The implication is that many more billions of people who currently can't participate in the world market, or store and grow wealth, will soon be able to without needing to wait for their government to catch up.

This economic freedom is vital to an Open Society, because by giving citizens around the world a platform upon which to build wealth, they can have more security, more engagement with economic activities, and become productive and prosperous citizens that are, importantly, given the opportunity to pursue happiness in their own terms. Economic freedom gives citizens agency.

Digital Ownership & User Agency

The ability to own assets isn't limited to currencies. With blockchain, anything is available for ownership verification. Blockchain could be used for proof-of-ownership of both physical and digital assets. This, of course, is the realm of NFTs, and the impact is astounding because it can permanently shift the relationship between content viewers and content creators.

With NFTs, you can invest in artwork, not just own it. Imagine investing in a piece of art, and making a cut of the sale every time it is purchased. That is usually a power reserved for closed circles -- but not anymore. With creator tokens, we can even invest in individual artists and share in their success. This level of financial involvement is unprecedented, because creators and consumers can both create value from each other in a symbiotic relationship. Musicians, writers, directors, artists, and other creators can have their work funded by the community, and then the community can profit not only by the value of the content, but also the dividend from its success.

In essence, this is the most agency the user has ever had -- to be investors as well as consumers. To participate in the content they love.

The Final Frontier: Sovereignty in Communities, Corporations, and Governments

One of the simple, yet most important applications of a blockchain is the ability to guarantee that votes can be cast easily, securely, and instantly. This means that we can increase the frequency and ease with which votes are made, at scale. Imagine being able to more deftly and easily vote on matters that influence the direction of your community, your company, or your government.

To these ends, one of the most fascinating advancements of blockchains is the creation of Decentralized Autonomous Organizations. According to Wikipedia:

A decentralized autonomous organization (DAO)... is an organization represented by rules encoded as a computer program that is transparent, controlled by the organization members and not influenced by a central government. A DAO's financial transaction record and program rules are maintained on a blockchain. What this unlocks is the possibility for a bottom-up approach to organizational governance. Engines for change in the hands of the people. These could be, if well-applied (and there is much research being done on how best to apply new governance models), extremely democratizing for all social systems. DAOs could be used as complimentary systems to modern Cooperatives, or overhaul the corporate structure. One such implementation I am intrigued by is the Distributed Cooperative Organization (see Indeed, there's a world of opportunity for us to improve our systems — even the ones most of us thought we couldn't change. New things are possible, and we can shape the world -- without destroying it first.

Conclusion: A Vision of Hope

I believe that through an open source philosophy and the use of blockchain technology to solve the issue of trust in critical areas, we can slowly begin to forge a stronger society. One that is truly free in a significant capacity, where the individual has agency. This new society is one in which we can trust our systems, and engage with them in a spirit of cooperation. And cooperation is key. It’s the ultimate goal. A society where we transact with each other and not against each other. Where money is the oil in an apparatus of growth rather than an ultimate goal.

But to create this society, we have to be willing to give everyone the opportunity to get involved, and give them the resources necessary to learn how to make an impact. No growth can happen without creating an environment where everyone has the resources, incentives, and opportunity to engage.

This is just the start. This article is necessarily limited by how much I know, but there is a vast community of people with far more knowledge, and far more vision than I have alone who are working to change the world. Will you?

Thank you for your time,

- Juan F. Lam, Spring 2021


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