Election 2020 will be on the Blockchain
The original title was supposed to read something like “How Blockchain can Help Campaign Finance.” I was then going to present two specific use-cases, but how boring is that? So I spiced it up a bit. Enjoy.
Imagine the following scenario. Instead of just making the usual rounds to raise money for his re-election bid in 2020, President Trump decides to employ the blockchain to assist in the effort.
Why might this be important? Well, campaign funding is highly correlated with campaign victory (details here). Of course this is not the only factor in winning elections, as President Trump demonstrated in 2016. However, it would also be foolish for the Trump campaign to stick to the same strategy from 2016 and assume challengers have not had a chance to recalibrate.
We can agree then that a vigilant campaign — relentless in effort and flexible in strategy — is best. Blockchain simply presents itself as a new weapon on the campaign battleground. The question is who will be first to use such a tool? Who will ride the blockchain?
“Opportunities multiply as they are seized” — Sun Tzu
Use Case A — Direct Donations
Donating to Campaigns
This is a fairly straight-forward use case. Imagine that instead of using cash or credit card to make a donation, you simply transferred ether or bitcoin into a campaign wallet.
What would be the advantage of doing this? The immediate benefit applies to all uses of public blockchains: transparency and auditing. This can help reduce campaign costs by eliminating funding inefficiencies.
Now before anyone jumps in with criticism that blockchain also opens the door to contributions from unscrupulous sources (e.g. The Russians), it’s probably worth repeating that public blockchains are auditable. This means that all transactions are visible to the public. If a campaign treasurer decided to use contributions from some mystery source, it would set off alarm bells.
It’s also important to remember that the regulatory landscape for cryptocurrencies in campaign finance is still, to this day, out of whack:
The Federal Election Committee (FEC) issued a welcome advisory for cryptocurrencies back in 2014, but this opinion is a bit dated. At the moment, state ethics bodies have passed all kinds of strange rulings. The result is a patchwork of contradictions spread across all 50 states (details here).
The current regulatory mess does not guarantee that this landscape will remain unchanged for years to come. The government could catapult into action, driven by any number of events.
For instance, another crypto bull market could spur a sea of politicians into action. Likewise, broad adoption of cryptocurrencies could create enough pressure on state and federal governments to simply acquiesce to the masses — think uber vs.regulators. We all know who won in the end (details here).
Receiving Badges for Donations
A campaign donation doesn’t necessarily need to end with a receipt. Contributors can receive a variety of badges in exchange for their donation.
For instance, a donation beyond some specific amount could trigger a badge to be issued to the donating wallet. So someone making a $100 contribution to the Alexandria Ocasio-Cortez Campaign could receive a badge that might look something like this:
The Campaign organizer could then place all holders of this special token onto an exclusive list. Members of this list could be given special access to a variety of events: exclusive dinners, featured galas, book signings, priority access, one-on-one meetings, etc.
In doing so, the badge would gain actual value-based price rather than just in scarcity value (i.e. CryptoKitties). And since the badge lives on the blockchain, it could easily be traded as a Non-Fungible Token (e.g. ERC-721) at a number of exchanges: OpenSea, RareBits, etc.
What This All Means
Donations don’t need to be boring and they don’t need to be wasted — if the candidate loses. The blockchain presents three benefits to campaign funding:
- Easily-accessible auditing (transparency)
- Reduction in campaign costs (elimination of funding inefficiencies)
- New value for the campaign, the candidate, the supporter, the speculator, etc.
Focusing on this last point, let’s imagine how this value might be distributed to all participants involved.
The Campaign
Yes, the campaign does benefit immediately from a donation. The badge, however, is a point for further engagement. Owners of badges are naturally incentivized to promote the campaign and potentially the new regime.
The Candidate
Where there’s a winner, there’s also a loser — at least in politics. The loser, however, doesn’t necessarily have to “lose.” The badge can continue to serve as early “proof of support.” And since it exists in perpetuity, the candidate can draw upon the loyal bunch in future public and private ventures.
The Supporter
A campaign supporter no longer has to be concerned that their contribution begins and ends with a donation. The newly minted badge can be used for exclusive access to events. No longer a supporter? Sell or trade your badge.
The Speculator
Plenty of cynics round the world and there’s no shortage of them in politics. Nate Silver might not see a difference between two candidates but thinks that, just maybe, one of them has a good chance of winning. The candidate’s hair alone is worth the vote! Why not invest (donate) in his campaign and receive a nice return (badge)?
Contact
A small group of friends are working to shift this idea from theory to practice. If you’re interested in speaking with us — hearing more or whatever — do drop us a line at www.projectatlas.co or email me at isaac@projectatlas.co.
Coming up…
Use Case B, Token Bonded Curves in Campaign Funding.
