Two Token Model TTM – A Cryptoeconomic Approach For (ICOing) High-yield, Stable Decentralized Networks

On December 6, 2017, game company and distributor Valve announced that its gaming platform Steam is no longer accepting Bitcoin as a payment method. The company explained that Bitcoin transaction fees have gone up to nearly $20 per transaction last week, “compared to roughly $0.20 when we initially enabled Bitcoin.”

At the same time, CryptoKitties burned up 15% of Ethereum’s gas, causing a mid-level congestion and increasing in-game fees.

Since we have been working on some ICO projects over the last months, focusing on cryptoeconomics and token design, we felt the need for a model that would allow a high-yield return for investors on the one hand, whilst guaranteeing the stability and a proper functioning of the specific application(s) at the same time.

Two Token Model TTM Thesis
Decentralized networks need a token model that

  1. guarantees a stable cryptoeconomic mechanism to exchange assets, services, time and money between peers, and, at the same time,
  2. allows investors to reap large economic benefits, and, therefore
  3. allows an overall story of combining a cooperative/post-capitalist model with a pure capitalist play by technically separating both aspects through the representation of two dedicated tokens.

Proposed Solution

A) Two-Token Model

The network features 2 different types of tokens:
a) a core token (CT) that is tradable at crypto-exchanges,
b) an application token (AT) (per application)

CT
The only function of the CT is that of a currency. In all of the network’s potential applications, there is one overarching CT.

AT
The AT is designed depending on the respective application’s requirements. It is the only token that allows the usage of the respective application. It is not listed at any exchange. Potential listings of ATs probably could not be prevented technically, but by regulation: The network defines the listing of AT’s as not allowed and will exclude applications that behave otherwise. Organizers of applications that already have a token will be offered to exchange their tokens for AT. Additionally, they can be awarded CT depending on their applications’ asset values.

B) Token Issuance Mechanism

Initially, there will be two events that happen at the same time:

  • SAFT of CT to (accredited) investors
  • One-time distribution of (free) AT to interested potential network application users (comparable to a basic income)

The Token Story

A (revenue-driven, high-yield) SAFT will finance the development of the network and serve as the initial AT supply of the network. Within the first applications running, AT holders can earn additional AT, and, directly derived from that, additional CT. The intensity of use and supply of AT represents the intrinsic value of a CT.

This model of a clear, technical separation into  – and combination of – a speculative and an application part should serve the initially conflicting interests of both categories of the network‘s stakeholders: the potentially application-interested majority of AT holders and the potentially solely commercially driven and high-yield-driven investors who hold and trade the CT.

Every app token holder (ATH) will receive CT’s additionally to their AT’s, if the intensity of use of the application reaches a certain threshold. As long as the intensity of use is above this threshold, the ATH will receive additional CT’s, scaling with their intensity of use. When the intensity of use sinks below the threshold, there will be no CT’s awarded further on.

Definition of Intensity of Use IoU Criteria

As mentioned, ATH are being rewarded CT depending on their intensities of use of the application(s). There are several aspects of defining an “intensity of use (IoU)” in a good way. First, an ATH could use a specific application very frequently. This could add to her IoU. Then, the ATH could move huge assets within an application. Again, this could add to her IoU. Further on, an ATH could use an application in a way that leads to a higher IoU of another application. This would lead to trans-application elements of the IoU’s algorithm. Then, there are further aspects, s.a. hoarding/inflation, etc..

Model Attractiveness

The definition of the IoU algorithm is one key aspect of this token model. On the one hand, it seemingly is the most complex problem to solve for the network. On the other hand it offers the opportunity to create one single algorithm that is completely variable in design and can be tweaked throughout the lifespan of the network without any need for changing the structure.

Due to the fact that the AT is not tradable, and the IoU algorithm prevents the ATH from hoarding and other unintended use, it can be regarded as stable.

The CT, in turn, is a tradable token that entails no other rights than being exchangeable with other currencies. The prize of the CT will be defined by market forces alone. This pure market-driven nature of the CT, combined with the value(s) of ATs, makes the network’s model highly attractive for application-focused users, as well as for investors.

We have intensely discussed the TTM within our network, and we have not found severe weaknesses that could prove to become showstoppers. However, we invite you to prove otherwise! Please provide us with your feedback on TTM – thank you!

The Evolution Of The Enterprise From Institution To Platform To Protocol In A Tokenised Economy

From the early days of capitalism, when from 1633 the Hollandische Mercurius referred  to capitalists as the owners of capital, on to David Ricardo who, in his Principles of Political Economy and Taxation  is seen as the one who actually coined the term capitalism, until today: the structure and behavior of the enterprise as the main capitalist entity, hasn’t changed that much. With the advent of blockchain technology, the evolution of the enterprise could pick up pace, dramatically.

An enterprise can be defined as the largest participant of an economic system with an ideology based on – in most cases – private ownership of the means of production and their operation for profit. In the early days, the owners of an enterprise would manage its operations themselves. With the advent of the public corporation, ownership and management were separated from each other: in most cases, the owners did not participate in the management of the company but delegated this to employed executives. With this separation of ownership and management, and a trend towards larger entities with hundreds to thousands, to hundreds of thousands of employees, enterprises had to be structured in a way that would enable a proper management and controlling. In democratic countries, there are specific sets of regulations and laws that provide the framework for owners’ and managers’ scopes of action.

The Enterprise As An Institution

Throughout the history of capitalism, enterprises have been regarded as stand-alone, singular entities, existing because of the product and service portfolios they would offer to the market. Aspects of enterprises’ interdependencies and connections with their environments played a minor role: one of the better known examples of this is James Buchanan’s Public Choice theory that describes people’s decision-making process within the political realm. When, with the Industrial Revolution, people became aware of the significant external effects enterprises could have not only on the lives of their employees but on the environment, etc., something changed within the enterprises: owners and managers started wondering how they could address their enterprises overall impact on the outside world.

Another aspect that made managers think of the interdependency of their company with others, was marketing. Companies discovered that it wasn’t enough to produce high-quality products – they had to tell potential customers about it and even had to compete with other companies offering similar products.

The Enterprise As A Platform

Acknowledging external impacts of enterprises and the shift from supply-side to demand-side driven markets mark a clear behavioral change for enterprises: trade  unions, environmental regulations, but also purely economic aspects, such as just-in-time production or supply chain optimization, all have led to a new kind of enterprise – evolving from institutional constructs into a platform, acting as hubs mainly responsible for organizing a network of partners making sure a final product will be presented to the customer.

The enterprise as a platform: these days, most companies would be happy being regarded as a platform. After all, that propels them into the top ranks of the innovative minority according to AccentureBain and other consultancies.

And yet, the platform enterprise isn’t state-of-the-art.

Platforms may offer many positive aspects but they lack all advantages of a decentralized, trustless system, such as a blockchain protocol. Apple, Tencent, Siemens, or other giant platforms are centralistic structures that are successful as long as each platform partner plays along: as soon as one entity in the supply chain fails, the product can’t be delivered on time or with a certain quality. Costs of managing and controlling the platform processes itselves have become immense. In the event of an external irregularity, e.g. an activist group’s protest on the basis of an alleged misbehaviour, followed by a consumer boycott, could force even market leaders to halt the production process or even to discontinue a product line. Platforms are highly sensitive against irregularities because of their centralistic architecture.

The Enterprise As A Protocol

There is a cure for this sensitivity: if platform enterprises improve themselves further and evolve into protocols, they become resilient against internal as well as external attacks and they can regain what most of today’s companies have continuously lost in the past years: credibility and trust in the eyes of consumers. A protocol can be described as a defined set of rules and regulations that determine how data is transmitted in networks. A blockchain protocol is a decentralized database and ledger that allows all participants of the network to work with the identical, consistent data set at any time.

Convergence: Blockchain + Smart Technologies

A protocol enterprise uses blockchain technology to share the database and its additional, external intelligence, such as AI, autonomous machines, VR or AR, to collaboratively manage and control a supply chain process. The system is completely decentralized, featuring automated processes in line with a set of rules and regulations all participants have agreed on – the governance model. A liquid feedback mechanism ensures that all participants have the ability to participate in the network’s opinion making process. Depending on the intended level of openness, either selected third parties or the general public may also join the network. In the first case, a private, permissioned blockchain would allow a pre-defined group of participants to join the network. If everybody should be granted access to the network, a public blockchain would be used.

Cryptoeconomics & Token Design

Participants of blockchain networks need tokens to communicate or, more correctly, to transact on the blockchain. These tokens can take different shapes: they can represent a value store only, or they come with a set of instructions defining the so-called token design, or cryptoeconomics of the network. Cryptoeconomics describe the incentive mechanism that motivates participants to actively engage in the network.

In the same way, the token design is the regulatory framework for behaving within the network, it’s the (re-)presentation of each participant’s behaviour and value system. In other words: the token is the representation of the brand equity of the network’s or protocol’s participants. Customer perception will be created through the design and use of the blockchain network tokens. Since all transactions in a blockchain are immutable and, therefore, represent an accurate, consistent history, all actions of a protocol enterprise are open for scrutiny by third parties, s.a. auditors, or the general public, i.e. (potential) customers. CEOs of protocol enterprises won’t have to fear misleading accusations by activist groups. However, they have to be aware that omniscient auditors or customers form their opinions on the company on the basis of a complete behavioral history. Bad times for fraudsters!

A Tokenised Economy

It presumably will take years, if not decades, for existing enterprises to evolve in protocols. Also, many of today’s platforms will not join this evolution and will remain platforms or even morph back into institutions before the end of their business cycle. But for a new breed of contenders, blockchain technology provides the basis for a tokenised product offering already today. These vendors won’t necessarily regarded as enterprises in the first phase, but they might take over the role of today’s market leaders.  The key aspect of a tokenised economy is the token representing the behaviour and values, or, the brand equity, of market participants.

Blockchain technology is still in its infancy: most systems are not enterprise-ready, yet. However, the decentralized and open nature of blockchains provide the basis for a market penetration in an insane mode . Bitcoin, the first blockchain protocol, has evolved into the world’s 6th largest  currency by circulation  according to the Bank for International Settlements. The figure is based on a value of bitcoin at $10,765 each, meaning that the total value of all bitcoins in circulation is $180 bln. Bitcoin evolved into this widely used currency within nine years of existence – being the very first of its kind, initialising the category of cryptocurrencies.

Solarcoin, another cryptocurrency and token, was launched in 2014.  It’s a global rewards program for solar electricity generation: 1 Solarcoin represents 1 MWh (megawatt hour) of solar electricity generation. Verified solar electricity producers,  may get Solarcoins for free when participating in the network. 99% of Solarcoins will be given to solar electricity producers of 97,500 TWh (terrawatt hour) over 40 years. The creators of the Solarcoin foundation expect a market price of $30 per MWh in unregulated and unsubsidised markets. As of today, a Solarcoin costs $0.50 – so, there us a long way to go to reach a $30 price tag. However, at $0.50, Solarcoin has the third largest market capitalisation of all cryptocurrencies, reaching over $45 bln. Since renewable energies, especially solar power, cover more and more of the world’s energy consumption, we could expect the Solarcoin network becoming the or one of the main vendors within this space. And, what else is Solarcoin than a reasonably tokenised product offering?

For us, blockchain technology is more than a database and a ledger: it’s the basis of a tokenised economy. Done right, blockchain protocols not only allow new vendors enter a crowded market, their decentralized and open characteristics provide the tools for decentralized and open business models, such as (a renaissance of) cooperatives, collectives, etc.. Blockchain technology provides the tools – creators and entrepreneurs may now use them and start morphing centralized, vulnerable platform enterprises into decentralized, resilient protocols.

What Is CrowdstartCoin?

CrowdstartCoin (Ticker: XSC) is a digital currency rewarding blockchain developers.

Launched in December 2017, CrowdstartCoin presents the additional advantage of being a tangible virtual currency: in fact, by coupling each line of code committed to projects within the blockchain ecosystem to the production of a CrowdstartCoin, the virtual world joins our physical world. Put another way, CrowdstartCoin works as Reward Miles: any blockchain developer receives CrowdstartCoins for code that she adds to tye development of the blockchain ecosystem – and it’s free!

CrowdstartCoin has a social utility for its community: by rewarding a blockchain developer, CrowdstrtCoin acts as an incentive, stimulating the development of the blockchain ecosystem worldwide. CrowdstartCoin is already distributed within three European countries and is intended to be circulated worldwide: any blockchain developer may apply and claim his CrowdstartCoins for free. To do so, the developer simply fills out this form online with data proving that she has committed code to the blockchain ecosystem.

3-Phase Incentive Scheme

The grant mechanism for delivering CrowdstartCoins is based on 3 phases:

In the first phase, CrowdstartCoins will be directly distributed to the active developer community, approached through blockchain conferences, meetups, forums, etc. Developers committing code to key blockchain projects can opt-in to receive CrowdstartCoins for free for code that has been accepted.

In the second phase, the distribution of CrowdstartCoins will be semi-automated by using a smart-contract-based system to pay out tokens according to the accepted commits. Technologies to be supported by these incentives include the core protocols of leading blockchains, e.g. Ethereum, IOTA, Monero, etc..

In the third phase, members of the community will be able to suggest projects to be rewarded with CrowdstartCoins. A liquid feedback model will be used to enable community voting and determine which blockchain projects should be included.

CrowdstartCoin therefore acts as an incentive for the future development of blockchain technology. Since 1 December, 2017, CrowdstartCoin  is officially listed at the cryptoexchange EtherDelta, with the ticker symbol XSC.

Cryptoexchange EtherDelta Officially Lists CrowdstartCoin XSC

As of today, 1 December 2017, our CrowdstartCoin XSC is tradable on EtherDelta, a decentralized cryptoexchange. 

We are very happy that, ten days after having issued the first CSC to IOTA developers at IOTA hackathon, in Gdansk, the tokens have been officially listed on EtherDelta!  From today, blockchain developers can grow the value of their own token that serves as a reward for contributing to the evolution of the blockchain ecosystem!

Don‘t waste your time, devs! Go, claim your XSC – and trade them!

Incentivizing Blockchain Ecosystem Development

The final decision has been made: We will not ICO through our brand Crowdstart Capital. After having worked on the preparation of a token sale based out of Germany several months we’ve reached the conclusion that such an ICO is not advisable at this time.

Two issues have been the decisive factors: First, an ICO based out of Germany would have to be done in the environment of a legal limbo. Other project teams may decide to take the risk of selling a virtual currency to professional and/or individual investors in Germany but we’ve decided that the regulatory uncertainty and risk is too high. With our parent company Datarella, we have built a solid brand reputation within the blockchain ecosystem and we are not willing to put this at risk.

Second, we think that we can better meet our goal of contributing to the blockchain community by giving our Crowdstart Coins away.  Instead of selling tokens to investors and using this cash to provide blockchain-based startups with consulting, services and solutions, we will reward Crowdstart Coins (XSC) to developers who add valuable code to the blockchain ecosystem.

We gained this insight to change our model while working on the cryptoeconomics; i.e. the inventive mechanism within a specific community. Finally, we have come up with a 3-step-process of distributing Crowdstart Coins – “XSC” – to the blockchain community:

A Blockchain Evolution Incentive Scheme

Phase 1 – Initial Token Distribution

In the first phase, we will distribute tokens to developers at conferences, events and hackathons. This activity will occur primarily in Europe and the distribution will be at the discretion of CSC. The goal of this phase is to get tokens into the hand of active developers and blockchain early adopters/enthusiasts.

Phase 2 – Smart-Contract-Based Token Distribution

Developers committing code to key blockchain projects can opt-in to receive XSC tokens for every line of code that is accepted for their respective projects. CSC will set up a smart-contract-based system that will pay out tokens according to the accepted commits. CSC will programmatically monitor the git repos of major projects.

Phase 3 – Liquid Feedback Mechanism

In the third phase, members of the community will be able to suggest projects to be included in the incentive scheme, a model known as liquid feedback. Token-based ballots will be used to enable community voting and determine which blockchain projects should be included.

In this phase, we’ll also be rewarding developers to contribute to our code base. Essentially, over the course of the three phases of the incentive program, it should morph from being a mostly manual process to a fully automated process.

If you’re a developer who committed code to advance Blockchain technology at-large, you’ll be eligible to receive XSC tokens. You can request XSC by filling out the form:

Developer Incentive Program: Claim XSC Rewards

Show us that you’ve got the right stuff!

IOTA Hackathon Kick-off Event For CSC Blockchain Ecosystem Incentive Scheme

With our project Crowdstart Capital (CSC) we seek to support the developer community and the blockchain ecosystem at-large. This document seeks to clarify specifically what these terms mean as well as outline several options for supporting our goals in this area. First, we define the target audience:

Developer Community: We define the developer community broadly including:

  • Active professional developers
  • Computer science and university STEM students
  • Potential future developers
  • Software companies
  • Open source software development organizations
  • Software startups

Blockchain Ecosystem: This term refers to various blockchain technologies as well as all the technologies that support and connect these projects. Here we are using the word blockchain as a catch-all for all distributed ledger technologies including block-less tech such as the IOTA Tangle:

  • Core Blockchain Protocols: i.e. Ethereum, Monero, Neo, Qtum, Polkadot
  • Selected dApps  (decentralized applications)
  • Supporting and connecting technologies: Atomic swaps,
  • multisig, hardware and lite wallets, governance protocols, etc.
  • Alternative protocols directed at a specific segment, such as IOTA for IoT
  • Exchange and liquidity services
  • Blockchain derivatives
  • CSC = Crowdstart Capital, a brand of Datarella GmbH, Munich
  • XSC = Tokens, originally provided by Crowdstart Capital

After having defined the target audience, we will create the incentive scheme in three consecutive steps:

Phase 1 – Initial Token Distribution

In the first phase, we will distribute tokens to developers at conferences, events and hackathons. This activity will occur primarily in Europe and the distribution will be at the discretion of CSC. The goal of this phase is to get tokens into the hand of active developers and blockchain early adopters/enthusiasts.

  • Potential Venues for XSC Distribution
  • Blockchain-related conferences
  • Hackathons
  • Incubator events
  • Blockchain meetups

In all of these contexts, different amounts of tokens will be made available for various levels of community participation. A wide variety of people will be rewarded for their community participation. Some types of participation could be more highly valued than others. The winners of a competition for building a new type of dApps at a hackathon might receive significantly more XSC than the bulk of the participants. However, the idea is that most types of contribution should result in earning some XSC tokens.

Exemplary reasons for being awarded tokens

  • Prizes for the winners of hackathon events
  • Honorarium for development event speakers
  • Bonus for event participants
  • Bonus for webinar participants
  • Bonus for participants travelling long distances to attend events

In order to collect tokens at, for example, an event, all you need is to have an Ethereum wallet which supports ERC20 tokens. During events, we will collect the relevant public keys and distribute tokens live to the participants. After that, participants can trade or hold their tokens or use them to purchase discounted consulting services from CSC. For more information on using XSC tokens to purchase discounted consulting services, please see http://crowdstart.capital.

During Phase 1, tokens may also be awarded outside of events to reward individual contributions to the overall blockchain community. The point here is to get tokens into a wide variety of people’s hands and incentivize participation in building the local development community.

Phase 2 – Smart-Contract-Based Token Distribution

Developers committing code to key blockchain projects can opt-in to receive XSC tokens for every line of code that is accepted for their respective projects. CSC will set up a smart-contract-based system that will pay out tokens according to the accepted commits. CSC will programmatically monitor the git repos of major projects.

The Process

Developers sign up on our website with their GitHub username and a public key for an Ethereum wallet.  In order to ensure that those people actually doing the development work are also the people who get the token rewards, developers will also have to post their public key in their public GitHub profile.

Once registered, developers just need to do what they do best: Code! For every line of code accepted to one of our registered and monitored projects within the blockchain ecosystem, CSC will transfer tokens to the author of the code. CSC also reserves the right to transfer bonus tokens to developers who solve particularly pressing bugs or issues or who contribute significantly to certain features.

  • Additional Actions Earning Tokens
  • Referrals: Developers who refer other developers to the incentive program
  • Commits to documentation/wikis
  • How-to’s or blog posts associated with official project documentation

The exact number of tokens that each action will earn is not determined exactly, yet. Project code will likely be rewarded with more tokens than pure documentation for example, but all accepted commits are eligible for earning tokens. Obviously, good documentation and stability of key blockchain projects needs to be improved in order to bring the blockchain ecosystem closer to enterprise-readiness.

CSC will start with providing incentives for development of Ethereum because it is the biggest and most widely accepted blockchain with a Turing-complete programming language. This said, it is also under-documented and could definitely use further support in order to progress and become an enterprise-ready solution. The second blockchain project whose development will be awarded with XSC tokens is IOTA, because of its assumed aptitude for IoT-related projects.

In Phase 3, CSC will incorporate a mechanism for electing new projects to be supported. This mechanism will be based on a liquid feedback model enabling a contemporary scalable, decentralized decision making.

Phase 3 – Liquid Feedback Mechanism

In the third phase, members of the community will be able to suggest projects to be included in the incentive scheme, a model known as liquid feedback. Token-based ballots will be used to enable community voting and determine which blockchain projects should be included.

In this phase, we’ll also be rewarding developers to contribute to our code base. Essentially, over the course of the three phases of the incentive program it should morph from being a mostly manual process to a fully automated process.

One essential part of this phase is that developers will be incentivized heavily to build the secondary smart contract which will continuously monitor the GitHub accounts for commits and facilitate voting.

A secondary smart contract will enable voting by people who already have some XSC. The community will be able to propose which projects to support in Phase 3. The framework for Phase 3 – a Liquid Democracy, or, Liquid Feedback process – will be described in the next post.

Kick-off at IOTA Hackathon, Gdansk

The kick-off event for this blockchain ecosystem incentive scheme will be the IOTA Hackathon in Gdansk, Poland, 17-19 November, 2017. There, we will award IOTA developers XSC tokens for committing code to the main branch and for other valuable inputs. The IOTA hackathon provides the ideal event for the initial distribution of XSC since during this 2,5-day get-together the Crowdstart Capital team and the hackathoe’s participants can perfectly define and decide on the value of the inputs to the blockchain and, henceforth, on the   amount of to-be-earbned XSC tokens.

Blockchain and Liquid Democracy – Phase 3 of the Crowdstart Capital Blockchain Evolution Incentive Scheme

This post by Joerg Blumtritt describes how blockchain technology supports decision making and voting mechanisms in processes called Liquid Democracy. These processes are the basis for Phase 3 of the CSC Blockchain Evolution Incentive Scheme.

Distributed consensus, realising consistency without central control, is one main achievement of the blockchain. From the beginning of the Internet revolution, there has been the discussion, whether our new forms of media and communication would lead to another revolution as well: a political one.

New forms of political participation are discussed, like Proxy-Voting or Liquid Democracy, which had been hardly conceivable without the infrastructure of the Web. However, all the digital forms of presenting, debating, and voting for policies all suffered from a serious flaw: Either there would be no secrecy of the vote, or the legitimacy of the ballot would not be accountable, due to the lack of provable uniqueness of transactions. The curse seemed to be either to vote in the open or make it impossible to decide if a person was indeed not voting multiple times.

Blockchain is built to heal this very problem, guaranteeing uniqueness of transactions even for totally anonymous participants. And Liquid Democracy, as I will discuss here, promises to deliver a versatile, efficient, and grassroots liberal form of decision making that complements the blockchain idea of consensus.

Liquid Democracy
Politics today is often set equivalent to negotiating opinions in the parliaments, committees, or council. Representatives are given the mandate from the voters to represent their interests. Not everyone can be an expert in every field. To foster adequate decision making, lobbyism has become an integral part of the parliamentary system. First, this is industry associations and interest groups (the JICs, ethnic organisations, religious and cultural associations etc.) relaying their clients’ interests to the representatives by providing arguments. Furthermore there are those groups of experts that gather around certain topics, rather loosely connected compared with the industry associations. Those think-tanks are often initiated by politicians and are much less transparent regarding statutes or goals compared to the associations.

Liquid democracy> is a conceptual alternative to pork barrel politics and lobbyism. It is designed as a method for direct democracy, where voters not only ballot at the decisions but negotiate one with each other every step of forming a political opinion and building the “volonté générale”.

Liquid democracy is a form of proxy-voting. Participants have suffrage and are at the same time eligible, can thus better be called ‘actors’ than ‘voters’. Actors can issue initiatives for projects like laws, changes in laws, budget decisions, etc.

Initiatives
To start the process of decision making, actors formulate their proposal as a so called initiative. The initiative is uploaded to the decision making platform it to be reviewed and discussed. This step can be preceded by informal discussion going on before the actual upload. During this discussion-phase, the initiative’s author can still change the initiative and react to criticism and suggestions. After a fixed time span (the same for all initiatives on one topic), the initiative’s text is frozen and can no longer be changed. In this ‘frozen’-phase, the initiative has to gather support from other actors who openly and actively register as voters for this initiative. Also, alternatives to the initiative can be added to be decided at the same ballot. For each topic, there a quorum of minimum support can be set, and only initiatives which get above this threshold make it to the ballots.

Delegation
All actors can delegate their vote to some other actor, who then may delegate her vote together with all votes delegated to her further on, thus forming chains of delegations. Delegation can be withdrawn and changed anytime until the deadline for the decision has passed.

Delegation

Secrecy of the vote
Of course, if delegation is possible to anybody, it requires accountability who gets delegated how many votes. As soon as somebody passes on my delegation, I want to be sure about the possible consequences to have the possibility to decide to withdraw and re-delegate or vote to myself. Before the blockchain, it was at least debatable if computer-based voting systems in general should require full identification of the voters to the public to prevent fraud. With liquid democracy, however, it would become mandatory to disclose the identity of most voters. With the blockchain, it is finally possible to heal this. Delegations can be provably legitimate and transparent without requiring to vote fully in the open.

Presentation instead of representation
In more then 2000 years, from the beginning of the Greek democracy and the Roman republic, the representative system prevailed, in which people delegate their interests to someone to represent them. It is not necessarily the case that representative systems are also democratic but in our contemporary understanding, all democracies are representative, that is, the decision making is done indirectly and not directly. There are obviously hardly any examples of grassroots democracy that could be called a success, apart from a few counties in Switzerland. Is the ideology of representative democracy thus without alternative? Representation, the parliament, has a long list of advantages – from “not everybody can be expert for everything” to “not everybody can join every conversation” – a discussion of which would lead to far here, as would a criticism of representative democracy as such. Here we want to focus on liquid democracy as an alternative hypothesis to representation.

Communities exist by their members’ taking tasks, fulfil duties within the community, and participate in the successes that are communally achieved. In a society, citizens delegate parts of their tasks and duties to the state’s administration. Over the course of the last two hundred years, the citizens of the so called western world have handed over more and more of their very own responsibilities to the state – caring for the sick and elderly, birth and death, provisions for retirement, education and many more.

How these delegated tasks have to be carried out is fixed by the process of representative decision making that characterizes parliamentary democracy.

Elected representatives are assigned to taking care about this for a time of multiple years. That all these jobs can be done, experts have to be paid for and equipped with the necessary means of work. To control the adequate application of these means, finally an administration is needed to oversee it. It is not clear, how the carefully balanced system of checks and controls between administration and parliament would be affected by such a radical change in delegation that liquid democracy would propose. The promise, however is to take back responsibility into the hands of the people.

Direct democracy is usually just seen as plebiscite, that is to “give the decision to the polls”. Basically, the political work in this case is still done by the elected representatives. Proxy vote or the imperative mandate goes considerably farther by tying the votes to a definitive decision behavior of the parliamentarian representing their voters. Imperative mandates are usually bound to decisions of conventions of voters. A party conventions or a citizen councils decides by majority, and the delegatee has to represent this decision in parliament. Proxy voting however allows for every single person to delegate their vote to those who would represent their opinion in the session. All three forms, plebiscite, imperative mandate or proxy voting – as in the same way then the classic “conscience-bound mandate” of the most democratic election laws – assume that there is a group of people, homogeneous enough to be abstracted into one set and then represented by their member of parliament.

In liquid democracy there is no separation of suffrage and eligibility, because everyone can contribute and vote. Everybody presents themselves – and even if they would have delegated their vote to someone else, there is no abstraction of people to groups that are represented. Liquid democracy is a system of direct, non-representative democracy.

A complete presentation of everybody for themselves show of course the marks of Max Stirner’s anarchistic egoism. And communities that are organized in such a non-representative way, like e.g. Wikipedia, in fact well appear like you would imagine Stirner’s anarchy.

A logical outcome of such a non-representative system is also, to no longer distribute governmental transfer payments, subsidies or appropriations top-down, but allow every person the same access. It is thus only consequent that Piratenpartei takes the basic income guarantee as a programmatic goal.

Liquid democracy is often compared with Wikipedia – everybody can participate, all discussions are open. And by means of delegation, if someone would not see themselves as competent for the decision or be busy during the election process, the may trust their political decision to their delegate. This process of Wikipedia-decision making faces some sound criticism: people who cannot articulate themselves very well or who would have to fear that they become “talked into something” or shouted down in the discussion, will not even begin to take part. Everyone who became victim to one of Wikipedia’s deletion-discussions knows how this feels. But still, Wikipedia stands without doubt for one of the very big successes in collective collaboration in the Net. It may appear unbelievable, what was achieved by thousands of people together, without any monetary incentive – and continuously, Wikipedia is brought further, gets enhanced, and this despite the communication culture there is after all gruff, to say it moderately. Wikipedia’s culture nevertheless is not a good example for inclusion; the horrible gender-bias alone is telling.

A concept to soften this spiral of silence is to give the actors the option to perform under a self given name and identity. Since the blockchain can guarantee that every physical person would get only one vote, this ‘autonymity’, the freedom of flexible choice of name, has the advantage, that it is possible to articulate a particular opinion without sticking this permanently to the own personality. However the disadvantages of acting under pseudonym in a system like liquid democracy stand, as discussed above.

Another criticism aims at political reliability. Continuity and predictability are obviously a necessary part of representative systems. The members of parliament represent their mandators only indirectly. For showing to their voters, that their intended politics would be dutifully represented, they have to stay constant and reliable in a few striking aspects, while their motives for most of their decisions would remain undisclosed to their voters. Whip and fidelity to the coalition are the well known consequences – not really in the very sense of our constitution that would see the the decision behavior only bound to the conscience. Since there is hardly any empirical data on Liquid Democracy, it is for now totally unclear, how stable and continuous the policies would be that the liquid decision making process would support.

Consensus instead of compromise
Liquid democracy means everyone is able to contribute, and consensus is to be build above the suggestions. Consensus does not mean majority. A majority overrules those who do not share the opinion – after the ballot, the set of voters will be regarded as homogeneous regarding the decision in question. For the daily party business this means: once a party committee has made its decision, all members have to stand behind this (at least this is expected from the party members).

In a non-representative, direct democracy, having unity behind the majority is not the point, since every opinion remains valid and cannot be overruled. Thus it is especially important to concentrate on finding consensus on the crucial topics. Consensus means to really stand behind the decision and not just be outvoted. So we could call consensus in politics as “agreement on the truth” in opposition to “deciding on opinions”.

The struggle for truth leads, as mentioned above, immediately to a rather gruff tone in the debates. Those inferior with arguments frequently take their last stand: the “Shitstorm”, usually a ranting against decisions or actions without arguments – completely convinced to be right and full of anger, not getting right. Other then the compromise which is closed between the two sides engaged – often formalized as in a coalition agreement – consensus is not fixed and not binding. Like in Wikipedia where existing texts are always open to edition, and where the authors continuously have to defend their words if they would like these to remain, the consensus in liquid democracy can always be left, and an initiative for change be placed. Frequently, so called trolls appear in the course of decision making in liquid democracy – people insisting on certain topics in a very destructive way. As inconvenient such arguing with trolls is, it still leads often to overcome differences and find a broadly based consensus. The continuous attack on established consensus stabilizes.

Liquid democracy is, when thought to its end, a radical breach with the foundations of democracy that we know and take for granted. Fully evolved, liquid democracy turns the whole process of delegation to parliaments, experts and administration around. The global crisis of the established economical and political order makes it worthwhile to think about opening a new chapter of enlightenment and really consequently accept humans as autonomous beings, that may better care for themselves as benevolent representatives ever could by governing them.

Representation (=aggregation)

  • People are regarded as elements of different sets which are represented by typical specimens, the representatives.
  • One speaks for the others
  • The representative is the only one who can be noticed of a set from the outside.
  • Works well if people are homogenous regarding their needs and preferences

Presentation

  • No two people are the same (As we clearly see now through web analytics, targeting, social media, etc.)
  • Speak with us, don’t speak for us.”Let’s listen to every voice without ironing out the differences.
  • Presentation instead of representation

Electorate

  • Participants or votershare suffrage and are at the same time eligible, can thus better be called ‘actors’ than ‘voters’. Actors can issue initiatives for projects like laws, changes in laws, budget decisions, etc.
    Initiatives
  • First step is formulating the initiative as a proposal and upload it to be reviewed and discussed. This step can be preceded by informal discussion going on before the actual upload. During this discussion-phase, the initiative’s author can still change the initiative and react to criticism and suggestions. After a fixed time span (the same for all initiatives on one topic), the initiative’s text is frozen and can no longer be changed. In this ‘frozen’-phase, the initiative has to gather support from other actors who openly and actively register as voters for this initiative. Also, alternatives to the initiative can be added to be decided at the same ballot. For each topic, there a quorum of minimum support can be set, and only initiatives which get above this threshold make it to the ballots.

Delegation
All actors can delegate their vote to some other actor, who then may delegate her vote together with all votes delegated to her further on, thus forming chains of delegations. Delegation can be withdrawn and changed anytime until the deadline for the decision has passed.

UN’s World Food Programme WFP Appoints Baltic Data Science As Partner In Building Blocks Project

Our subsidiary Baltic Data Science (“BDS”) has formally been appointed by WFP to support them on the scale-up of the Building Blocks project.

We are very proud to announce that our close development partner and Polish associated company BDS has formally been appointed by the World Food Programme for the further roll-out the existing Building Blocks platform. At the beginning of the this year, we together with our partner BDS started to build a blockchain-based proof-of-concept for WFP and transformed it into a fully-functional blockchain-based transaction platform in Jordan. The inhabitants receive food vouchers that can be used in the village’s supermarket.

So what are the benefits compared to traditional transaction payments? Thanks to the blockchain technology, our innovative system provides higher transparency of aid accounts for beneficiaries and easy tracking of transaction which helps to lower the effort of bookkeeping for vendors and WFP. The biggest, however invisible, advantage is a minimized risk of fraud or data mismanagement.

We are excited to follow the next phase scale-up of the transaction platform and want to thank WFP for their trust and wish both partners a successful roll-out.

If you want to learn more about our services or specifically this project, please contact us at info@datarella.com or BDS at info@balticdatascience.com.

About WFP:
The United Nations World Food Programme “WFP”, with its headquarters located in Rome, Italy is the world’s largest humanitarian agency fighting hunger worldwide. WFP is mandated to deliver the food necessary to save the lives of victims of natural disasters, wars, and civil unrest. On average, WFP reaches more than 80 million people with food assistance in 75 countries each year. About 11,500 people work for the organization, most of them in remote areas, directly serving the hungry poor. WFP is part of the United Nations (UN) System.

About BDS:
Headquartered in Gdansk, Poland, BDS is an international data science and blockchain development company specializing in business-focused solutions. BDS develops data-driven applications (mobile/desktop frontends and backends) for international customers as well as blockchain-based applications.

 

IOTA Hackathon

The blockchain tech sphere in the fall of 2017 looks totally different than in the same period of 2016. Then, many people heard about blockchain for the very first time, now there are several dedicated blockchain platforms for specific applications. In the field of Industry 4.0, beside supply chain and robotics, IoT applications provide a hotbed for highly scalable blockchains, such as IOTA, NEO, or QTUM.

For and with one of these IoT-specific blockchains, IOTA, we will organize a hackathon, a week-end full of code, co-creation and ideas.

BUILD THE FUTURE WITH US!

Today is blockchain, tomorrow is industry 4.0 and the internet of everything. Autonomous cars, sensors and intelligent factories are the future but how will they communicate and transact among one another on a worldwide scale? IOTA is a blockless ledger system which enables scalable autonomous machine to machine micro-transactions without fees. Want to get your hands dirty and take part in building the future?

WHAT’S THE IOTA HACKATHON ALL ABOUT?

  • Developing services or products for the internet of things
  • Gaining experience with IOTA’s blockless ledger system for cutting-edge machine to machine transactions
  • Keynote speeches by key players in the industry
  • Networking, fun, free food and friendly competition

THREADS TO BE PURSUED

  • IoT Based Business Plans
  • Hardware Connectivity Layer: Bluetooth, Z-wave, ZigBee or LoRa
  • Application Layer: MQTT, XMPP
  • Fog, Mist & Edge Computing for IoT
  • Quantum security
  • IoT Maintenance & Lifecycle Management
  • Identity of Things (IDoT)

WHO CAN PARTICIPATE?

  • Developers (Esp. JavaScript, Java, Python)
  • Business Practitioners & Economists
  • UI/UX Designers

SCHEDULE

FRIDAY 17 NOV
18:00 – 19:00
Reception and Networking: Get comfortable and get to know one another

19:00 – 21:30
Keynote Presentations: Introductions and food for thought
– Jörg Blumtritt (Datarella)
– Dominik Schiener (IOTA)

SATURDAY 18 NOV
9:00 – 9:30
Breakfast and Coffee: Fuel up for the Hackathon

9:30 – 10:15
Individual Introductions: Barcamp style three keywords per person
30 Second Elevator Pitches: Explain your idea, build a team that can execute it!

10:15 – 11:00
Team Building: Chat with team leaders of interest & decide which team you want to hack with.

11:00 – 12:00
Speakers round: Getting started with IOTA: Dev Tools & Resources from Baltic Data Science

12:30 – 13:30
Lunch Break: Enjoy some delicious food and get ready

13:30 – 16:30
Time to Hack: Build, Test, Iterate

16:30 – 16:45
Movement Break: Get your blood pumping!

16:45 – 19:30
Time to Hack: Build, Test, Iterate

19:30 – 20:30
Dinner Break: Take some time to nourish the body and get ready for the all nighter to come!

20:30 – Late
Hack Till Your Heart’s Content: It’s up to you. The accelerator is open all night. Code till you drop.

SUNDAY 19 NOV
9:00 – 9:30
Breakfast and Coffee: Fuel up for the final day

9:30 – 12:30
Hacking and Presentation Prep: Get your demos running!

12:30 – 13:30
Lunch Break: Nutrition for the final stretch

13:30 – 14:00
One Last Check: Audio Visual and Tech Check for Demos

14:00 – 16:30
Demo Presentations: Show us what you’re made of!

16:30 – 17:30
Jury Session: Enjoy some refreshments while the jury deliberates

17:30 – 20:30
Awards Ceremony: Celebrate with the winners, network and celebrate

APPLICATION
To apply for the IOTA HACKATHON 2017 register now!
Don’t wait for too long – the number of participants is limited.

LOCATION
Lęborska 3b, 80-386 Gdańsk
NIP: 583-290-74-40

Based on our experiences with hackathons we think that Gdansk, Poland, is a perfectly suited location for this IOTA hackathon. Looking forward to hacking with you!