How Decentralized Technology Can Change the Role of National Governments

By Peter Nobels, Founder and CEO of Kalipo

Throughout history, governments have been established to serve the interests of a population. The concept of a central government was invented to enact justice, distribute rights and provide facilities such as roads, hospitals and schools. Across the globe, democracy has dominated the leadership structures of entire countries. At first glance, this indicates that centralized governmental structures provide ample societal and economic opportunities to the world's populace. When we dig deeper, however, a different story emerges. Citizen dissatisfaction and political corruption illustrate some of the challenges for modern democracies.

Current democratic systems fail to implement the ideals illustrated by the ancient Greeks, who introduced the idea of all adult citizens participating in government. Alternatives, like Autocracy, offer even less rights to citizens, yet are becoming increasingly prevalent as the shortcomings of modern democracies leave populations longing for strong leadership. Creating a better system of citizen-centric governance means finding new ways to implement realistic and effective mechanisms. This can be achieved through the use and implementation of DAOs (Decentralized Autonomous Organizations).

DAOs, which are built on top of blockchain technology, possess the capacity to reshape leadership. DAOs help communities reach their mission and ideals through effective, trusted digital tools for governance and collaboration, holding the potential to transform the role of national governments. The main reason for this is the creation and facilitation of member-managed communities. DAOs require no central authority in order to make decisions, reinstating power into the hands of the individual. 

Where Did Democracy Go?

The U.S., often considered to be the one of the freest and largest democracies in the world, is de facto a 1 dollar 1 vote system. In January 2010, the U.S. Supreme Court’s “Citizens United” decision enabled corporations and other outside groups to spend unlimited funds on elections. By pressuring elected officials to adopt tax, and shape regulatory policies that favor the wealthy, billionaires and large corporations have the power to influence political decisions to protect their interests. As long as people like Mitch McConnell and Clarence Thomas support this 1 dollar 1 vote system, U.S. society, once a bright example of worldwide democracy, will continue to suffer.

Across 27 countries surveyed by the Pew Research Centre in 2019, a median of 51% are dissatisfied with the way their democracy is functioning. In the same study, a median of six-in-ten think no matter who wins an election, things do not change. This lack of felt and actual change is a consequence caused by both the politicians and the democratic system said politicians operate in. The fight for power consumes all energy from the power to execute. The prime focus on the needs of its own base prevents politicians from compromises from which all citizens can benefit.

DAOs allow members to take responsibility for decisions into their own hands, rather than passing the task onto higher-powered influencers. In the instance of citizen dissatisfaction, a DAO structured society would pass the weight of policy making back to the people affected by a particular challenge, creating a myriad of participatory governance. 

There Is An Alternative To Strengthen Society: Member-Managed Communities

The power of decentralization is the decentralization of power. This is the main component of DAOs, and is already benefiting a variety of industries, organizations and individuals. Take for example Agora school in The Netherlands. This school has managed to free itself from a curriculum prescribed by the national government through personalized student journeys group setting, by which students gain the required skills and by which they grow as a human being.

This example showcases the applicability of member management and the decentralization of power in pre-existing traditional structures. This example is also indicative of The Dutch education system’s ethos – described by the OECD as “the highest performing” across its member countries. According to a study produced by the OECD, Dutch educators “benefit from a high level of decentralization”.

Decentralization can have a hugely positive impact on healthcare also. Dutch visionary Jos de Blok formed a home health care organization, Buurtzorg (neighborhood nursing), in 2006 having found the traditional healthcare structure was negatively impacted by too many layers of bureaucracy and too little autonomy. The decentralized Buurtzorg now has a network of close to 1,000 self-organized and autonomous teams, leading to client satisfaction rates that are amongst the highest of any healthcare organization.

The distribution of coordination and decision making amongst the teachers of Agora and the nurses of Buurtzorg has led to the creation of member-managed communities. Web3 offers the architecture and the technology to create DAOs that support member-managed communities, improving existing decentralized initiatives and spreading the possibility for other communities and businesses to take advantage of decentralization. When applied to politics, DAOs stand to facilitate drastic changes in the distribution of power.

How DAOs Can Create Member-Managed Communities

A DAO allows a group of people to make decisions that are coordinated and enforced on a blockchain. The community set rules and regulations controlling DAOs are embedded into blockchain code, meaning no central leader is needed as the organization is highly automated. A DAO supports members with the tools required for effective collaboration and governance, such as treasury management and constitution management, allowing for adaptation of rule sets to changing circumstances and needs. This combination of functionality and automation make DAOs the perfect tool for member-management, a concept that can revolutionize governance by affording populations the power to influence the political landscape.

For example, should we wish to reestablish the governance associated with a national treasury, a DAO could be created. Starting with a shared mission, participants could vote about initiatives to which they want funds to be allocated. Rather than making decisions in parliaments and behind closed doors, governments operating in this DAO structure would offer several options to the nation’s population. Citizens would then vote in real time on a distributed ledger, meaning all votes would be traceable and verifiable. The most preferred option has the support of the people and will be executed. Of the people, by the people, for the people.

DAOs hold the power to fractionalize large scale decision making systems. When smaller communities, like a neighborhood or subsidiary, are granted the capability to adequately take control together, they become better. Buurtzorg’s transition to a polycentric system showcases this. It allows local subsidiaries to operate more efficiently and effectively. DAOs offer a publicly available infrastructure for every community, and thus for societies as a whole, to do the same. Such polycentric initiatives, within the constraints of the higher level entities, will really change the world.

DAOs, being based on Web3, also promises to reshape how we view and control data and ownership. The distribution of power and accessibility created by DAOs means users have control over their own data, delivering an alternative to the current situation created by big tech companies. On top of members owning their own data, members also can co-own the DAO itself by having a share in it. Being a co-owner makes them eligible to benefit from profit sharing. This co-ownership is needed to step away from the likes of the US 1 dollar 1 vote system. Based on Web3 architectures, the data verifiability and accessibility and co-ownership associated with DAOs presents a striking alternative. 

The Future Looks Bright For DAOs in Governance

DAOs offer a technology backed system of distributing power yielded by centralized control. This, on paper, works through governance voting mechanisms, transparent treasury management procedures, flat hierarchical structures and polycentrism. In the blockchain world, many DAOs are proving valuable in the formation of new companies and businesses, such as GitCoin, Giveth and Common stack. This technology can create a new era of member management, a tried and tested idea that offers an enhancement to the democracies running the world. Member managed communities and organizations offer co-governance and allow for the purposeful creation of aligned incentives.

Without the dominance of a central leader, ideas and community-centric governance can thrive. Built upon decentralized Web3 architecture, DAOs offer a frictionless technological base upon which these new community-centric governments can be created. DAOs tackle some of the challenges associated with moving any group of people towards a common goal. As seen in examples in varying industries across the globe, decentralization and autonomy fuel positive change across healthcare, education, business and even neighborhoods. Once DAOs are in a technological and reputational position to instill positive change in national governments, then the same advantages will be granted to entire societies, promoting the original ideals of true democracy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.