Meetup after meetup, conference after conference, conversation after conversation, we hear the same thoughts on how to think about blockchain technology. Most people compare blockchains to the internet, large tech companies, or operating systems (iOS, Android, Linux, etc.).
While the temptation to make such comparisons is clear, it is an understatement to call a blockchain a tech company, an operating system, or even the internet. Blockchains have government, economics, rules & regulations, penalty structures & fines, bank accounts, infrastructure, and diehard supporters. Adding all this up begins to look familiar; it begins to look like a nation.
This leads us to the idea of digital nations, where the token holders are its citizens. People often say “vote with your feet” if one disagrees with a country’s politics. We could see this evolve into “vote with your wallet”, where a citizen can express their discontent for network policies by exchanging the token of one digital nation for the token of another.
The Digital Nation
While the characteristics of blockchain certainly overlap with that of traditional tech companies, operating systems and the internet, working for a blockchain company helps you realize there is much more to it. Specifically, the effort that goes into the governance and economic structures of a blockchain network.
Many blockchain networks are adopting governance mechanisms known as Delegated Proof-of-Stake (DPoS) that emulate traditional governments. Token holders elect entities, similar to political leaders in traditional governments, via a transparent vote to govern and secure the network. This is done with complete transparency and is enforced by the rules and regulations written into the code of the software.
Elected entities are meant to act on behalf of their voters and for the betterment of the network. They spread awareness, build products and tools, and contribute to the software development of the blockchain network. If an elected entity is failing to fulfill its duties, voters can remove their vote and the entity is subject to the rules, regulations and penalty structures of the network.
While elected entities are equitable to traditional political leaders, the processes and guidelines are provided by the particular blockchain’s software. Regulations (and enforcement of such regulations), decision making policies, proof of ownership (i.e. land titles, vehicle registrations, etc.), proof of identity (i.e. driver’s license, passport, etc.) and balance of powers are all encoded into the software of the network.
Key features of traditional economies, such as money supply & interest rates, taxes, and business all exist within blockchain networks.
Money supply of a digital nation is programmed into the software of the network and each digital nation has different policies. ICON, for example, has dynamic money supply controlled by the elected leaders of the network (similar to how central banks often operate) while others have a fixed money supply.
Citizens of a digital nation have the option to lock their tokens for a defined interest rate (similar to a savings account or Certificate of Deposit), or maintain their liquidity and sacrifice interest payments. This is often intertwined with the governance structure, as citizens can be economically incentivized to vote.
In terms of taxes, the best comparison in a digital nation would be transaction fees. There is no central entity that controls the cost of transacting, however, fees must be paid to the network in order to keep it secure. Elected entities of the network must be compensated for their efforts, and one form of compensation is through transaction fees.
The last key part of an economy is business. In order to be considered a nation, there must be businesses built in such a nation, and we believe the DAO (Decentralized Autonomous Organization) will be a new type of businesses enabled by digital nations.
The existence of digital nations enables the existence of Decentralized Autonomous Organizations (DAOs). In the same way that a blockchain is an evolution of a nation, a DAO is an evolution of a company. A DAO can provide interesting benefits for both creators and participants.
These organizations will benefit from the freedom offered by their digital nation; freedom of money, freedom to participate, and freedom to pursue one’s interests regardless of jurisdiction. They exist outside of the borders of any one country, solely existing on the immutable ledger of its respective digital nation.
With faster establishment of a business entity, entrepreneurs can focus on building their business rather than archaic administrative work associated with setting up bank accounts and registering an entity. All of a DAO’s operations can be supported by the infrastructure provided by its digital nation.
Tracking value on an immutable ledger, without the need to coordinate with or receive approval from a third party, is something enabled by blockchain technology. One could conceivably process payments and store value without ever interacting with a traditional banking entity. With the tools available in a digital nation, a DAO could go through its entire lifecycle without ever opening a bank account.
Participants in a DAO are not judged based on previous work experience and they do not have job titles. They are judged purely by their contribution to the DAO and their opinions are weighted by their ownership. More ownership leads to a stronger voice.
Ownership of a DAO can be earned by accomplishing tasks (judged objectively by rules encoded in smart contracts) or purchased on an open and global marketplace, both of which are enabled by the software infrastructure of the digital nation. With the right incentive mechanism in place, participants that contribute more to the DAO will accrue more stake.
DAOs and Digital Nations are not perfect. A Digital Nation can’t offer a military and a DAO might not be the best fit for fast-paced businesses, but blockchain technology enables new business models and an opportunity for transparent democracy.
Looking at blockchains through the lens of a Digital Nation leads to the conclusion that the future could indeed have many blockchains. This is the future we believe in and this is the future that ICON is preparing for.
ICON is not building just an operating system, just a tech company, or just a new version of the internet. ICON is building the digital nation known as the ICON Republic, with the vision of bridging together a world of digital nations; and ICX Station will continue to accelerate the growth of the ICON Republic.
Your Partner in Blockchain,