Pseudonymous Fractals
On how to protect user privacy in Fractally applications
All blockchain ecosystems that exist today suffer from the same problem: Block production as well as general governance decisions tend to centralize over time. This is due to the simple fact that pretty much all consensus mechanisms suffer from Pareto distribution in one way or another:
Proof Of Work: Pareto distributed hash power → centralization in large mining pools
(Delegated) Proof Of Stake: Pareto distributed tokens → centralization in large stake holders
When it comes to important decisions concerning the ecosystem that go beyond block production — i.e. general governance decisions — things usually look even much worse:
Bitcoin: Small team of developers makes all the decisions
Ethereum: Large stakeholders make all decisions
EOS: ENF makes all decisions
Solving the problem of decentralized governance is critical for blockchain to finally become what we all want it to be: A true permission-less and censorship-resistant payment network.
Daniel Larimer recognized this early on like no one else and has dedicated himself to this all-important topic over the past few years. With “Fractally” — also “Fractal Governance” or “Fractal Democracy” — he might have found the Holy Grail of true decentralized governance.
Explaining the entire concept of fractal governance is beyond the scope of this article. Check out website, keynote, whitepaper and book to learn more!
The political playoffs in “Fractally” — as Larimer coined the term for applications of fractal democracy — lead to a positive selection of the most contributing members: In the weekly meetings, the active community members continuously rank each other based on their latest contributions. Thus, over time and on average, the highest ranks are always occupied by the currently most contributing community members. This makes Fractally a true meritocracy, a powerful reputation system for communities, and the most dynamic consensus mechanism ever for blockchains and their communities.
A crucial element of Fractally’s political playoffs is the appearance of participants on camera: To ensure that they are real people and to mitigate the risk of sybil attacks, it is required for any member who wishes to participate in the political playoffs to show their face to the community.
While this requirement undoubtedly contributes to a respectful culture of discussion while virtually nullifying the threat of sybil attacks, it comes with the major tradeoff of requiring members to reveal their true identities to the community. This is unfortunately a big deal in times of out-of-control and now completely openly tyrannical governments in the West: The crypto space is becoming more and more the focus of the powers that be, and it is only a matter of time before crypto and DeFi are cracked down on with all severity.
In short, participating in decentralized governance while exposing one’s real identity is already very risky for citizens of the Western world and will only become more so in the future.
Fractally is a powerful governance tool, but in its original form it does not offer its participants sufficient protection against tyrannical regimes.
There is only one solution to this problem: Fractals must become pseudonymous.
Obviously, some kind of identity is required to participate in the political playoffs of fractal democracy. After all, Fractally is a reputation system and without identity there is no reputation.
However, participants do not necessarily have to reveal their true identity in order to build reputation: Contributions could also be assigned to a fictitious identity behind which a real, contributing community member is hidden.
The use of pseudonyms in the Internet world is commonplace — even when it comes to reputation. An excellent example of this are “Massive Multiplayer Online Role Playing Games” — or MMORPGs for short. In this type of video game, which lives solely from the masses of its players, it is almost exclusively about in-game reputation. However, the reputation is not built up for the player’s real-life identity, but for his virtual, in-game character.
Players of an MMORPG do not simply let others play with their character. The risk of someone else ruining their character’s hard-earned in-game reputation through nonsensical actions is simply too high. Because just like in real life: Once a character’s reputation is gone, it’s difficult to rebuild it. Sometimes, instead, it’s easier to start from scratch with a new character. Needless to say, any contributions made with predecessor characters are meaningless for the new one.
The same concept can be applied to Fractally: The pseudonymous MMORPG character becomes a pseudonymous blockchain account (for example, an EOS account) representing a real participant on-chain. The identity of that participant within the ecosystem is then the sum of their social media accounts such as Telegram, Twitter and Facebook handles, a YouTube channel, a Github account and possibly even an SSH public key.
Anything is conceivable, as long as it makes contributions to the community identifiable and assignable.
After all, community contributions are pretty much always presented via some kind of digital medium in the breakout rooms and thus can always be associated with a specific (social media) account.
Via the Fractally smart contract, members could ‘trustlessly’ link their social media accounts to their pseudonymous blockchain account. Once this link is established on-chain, all community members can assign the contributions made by those social media accounts to the corresponding pseudonyms i.e. blockchain accounts participating in the weekly political playoffs.
Obviously, such a link cannot be broken again, as the blockchain never forgets. So once the reputation of a pseudonymous identity is gone, the same social media accounts cannot simply be linked to a new blockchain account, since they are already known to the other community members. It would be necessary — as in the MMORPG — to start from scratch with a completely new identity (i.e. fresh social media accounts and fresh contributions).
In the weekly political playoffs, the participants would only appear anonymously. Each participant’s voice would be distorted. Participants could make themselves unrecognizable to the camera by wearing a mask. They could use a 3D avatar or not appear on video at all. After all, due to modern “deep fakes”, it is nowadays impossible to determine whether a person appearing online in front of a camera even exists or not.
Video presence has long ceased to be a guarantee of a person’s authenticity these days. Fractally should not only acknowledge the existence of deep fakes, but even embrace their use to protect its members from authorities of Western regimes: Members should be encouraged to make use of deep fake technology to hide their real identities and instead participate with completely fictitious video identities.
During the first few minutes of each weekly meeting, members of the same breakout room would first confirm their pseudonymous identities to each other. This could be done, for example, by posting on one of their social media profiles linked to their blockchain account their current breakout room number along with their pseudonym. Thus, all participants of the corresponding breakout room would know that a particular participant is indeed the community member he or she claims to be.
A similar control mechanism might also become necessary for the “transparent” version of Fractally — the genesis version — in the future, precisely because of the danger of deep fakes.
One of the main objections to a pseudonymous Fractally system, as presented here, is trust issues. But is this really such a big deal? After all, even the most famous identity of the entire crypto space is a pseudonym known as Satoshi Nakamoto. No one knows who is really behind it, and yet this pseudonym is extremely trusted due to its reputation through contributions made — such as the Bitcoin whitepaper.
If Nakamoto were to participate in a Fractally session today, he could prove his pseudonymous identity to the rest of the members of the same breakout room relatively easily by making a transaction from his famous Bitcoin wallet. In this transaction, he could add the breakout room number as a memo. All other participants could then be sure that they are indeed in the same breakout room with the real Nakamoto.
Another example of reputable pseudonyms in the crypto space are the Monero developers. Many of them are only known by their Github account names. Nevertheless, they enjoy enormous trust due to the contributions they have made to the Monero codebase. If they were to participate in a Fractally session today, they could prove their identity simply by posting their current breakout room number on their Github profile through a ‘git commit’ in a repository created specifically for Fractally. All other participants of the same breakout room could thus be sure that they are indeed the real Monero developers.
Whether such a pseudonymous approach to Fractally actually works as well as the original, transparent version remains to be seen. The ZEOS community consists of a lot of great contributors, but they do not want to be associated with governance of a crypto project — certainly not of a privacy coin — out of fear of their government. All these active and contributing community members would be excluded from a transparent fractal. In a pseudonymous fractal, however, their participation would be possible.
One thing is certain: Fractally is the most promising approach yet to solving the problem of decentralized governance. Should the concept of fractal democracy work as well with pseudonyms as it does with real identities, it would be unbeatable. If privacy protection of all participants is guaranteed, it would no longer provide a target for tyrants. Fractally would only then become truly anti-fragile and could already unfold its full potential today.
