Why Coalitions in a Decentralized World Matter

“No problem can be solved from the same level of consciousness that created it” -Albert Einstein

Coalition Building Primer

Coalition building is an art, a science, a means of strategic organization. More than anything it requires individuals and groups to be willing to rise above their feelings of separateness, to actively collaborate in a spirit of mutual understanding, patience, and flexibility. When members of a coalition share responsibility, goals, and decisions, there is potential for great success, shifts and improvements on paradigms that exist in our world today.

The purpose of this thought piece is to look at organizational systems in mankind, draw on examples from history, what has contributed to their success, and failure, and explore how coalition structure is relevant to the systems that govern our interactions today, and in the future, with respect to cryptography, digital assets and distributed systems.

Human Systems of Organization

Yuval Harari, the author of the acclaimed book Sapiens, credits our innate ability to collaborate as the reason for our dominance in the animal kingdom. Ants can work together in huge numbers, but they do so in a rigid manner and with only close relatives. Wolves and chimpanzees cooperate with more flexibility than ants, but they can do so only with small numbers of other individuals they know intimately. Sapiens can cooperate in extremely flexible ways with countless numbers of strangers, which is why Sapiens have been able to rule the world. It’s a privilege of our species that we are able to get along with so many iterations of each other.

Harari also brings to light the power of language, which separates us from other species in the animal kingdom. Sapiens is the only animal on earth that can talk about entities they have never seen, touched or smelled, and forecast future thought. Most of the large scale human systems of organization are rooted around language, story, belief, governance, state, church, and tribe that govern interaction and give meaning to events.

Distributed Systems

We believe blockchain, the power of decentralized systems secured by cryptography, is the next great event, the next great story, the next great cognitive revolution. However, like every great revolution, or force, there needs to be structure in place to ensure the pillars of what it stands for remain, i.e., institutions, or as we explain in this thought piece: a coalition to ensure structure and due course. As complex systems unfold, man’s impact on them, and theirs on us, there is a need for an effective way to understand, organize, and transform existing systems and paradigms.

Human Systems working with Distributed Systems

We need coalitions because understanding and changing complex systems or creating new normals requires cooperation. As with any institution, government, army, or religion there are structures in place to guide behaviour. Often, however, traditional institutions, and decision making structures do not foster innovation or experimentation.

Decentralization implies non-linear and centralizing structures-from network and ecosystem governance to design and development, standards and policy creation. The problem in self-organizing systems being developed by the world today is that we are beginning to face non-technical challenges, mostly because of the novelty of governance that these systems present.

Bitcoin doesn’t care about laws, regulations or any one person or policy; it is pure in its design. The problem lies with people and with trust: how can I trust that you are who you say you are and you will do what you said you would do? As we upgrade and implement the technological systems we use to guide our interactions, we need to implement new systems of governance for human systems to nurture the right behaviours.

The requirements for global coordination surrounding aspects of the digital asset ecosystem are pertinent now, more than ever. There needs to be a means for coordination of policy and global standards that shape the interactions between governments, humans, and businesses, in order to ensure the survival of this technology. Bitcoin’s design is such that it requires no governance beyond its current open source development. However, for the next stage of broad mainstream adoption, infrastructure and systems being developed today that focus on bridging the new economy with the old, need to start working on coalition-based models to provide a level of coordination that ledger-based technology cannot alone solve for. The nature of disruptive and revolutionary systems in communication, organization finance and governance can be in and of themselves contentious and require careful thought to how challenges will be addressed along the way.

We are proposing a system that will help direct and foster change. Purveyors of paradigm change must be in place for them to ultimately be successful.

Why Coalitions?

A Coalition is an organizational structure bound together by a constitution, in which multiple parties cooperate, reducing the dominance of any one party within it. We look at it as an alliance for combined action, with a shared purpose & objective. We believe that, in order to truly leverage the strengths of cryptographic systems and the benefits of decentralization, there must be structures in place on a human level that can ensure these pillars are upheld.

The Relationship between Revolution and Coalition

Why do revolutions need leaders, and how do they fail? What are the elements that determine success versus historical fumble? Revolutions are an act of force but require thoughtful coordination; thrive on the symbolic and the strategic. Revolutions occur once you have a psychological shift; in order to create the psychological shift, be it abolishment of slavery, the right for women to vote, or the environment to be considered a shareholder in enterprise systems, you need collective conscience that is governed by a set of principles. This is the role of coalitions: to provide a set of rules, and standards, to guide revolutions.

What makes an effective coalition for a decentralized world? How can the tenets of decentralized open systems be applied to navigate human systems?

We believe in a design that facilitates interactions between components of a system to establish order and coordination, to achieve global goals, without a central commanding influence. Effective coalitions serve to build, curate and steward models. They are able to cultivate collective intelligence and put it at the service of collaborative initiatives.

Coalitions are Vehicles of Collective Intelligence

Coalitions, in a decentralized world, are a coordinating body proactively and continuously seeking advice and input to diagnose problems and identify preferred solutions.

Coalitions remain open to working with new groups in different ways and mandates that we communicate across cultures’ beliefs and approaches. Coalitions reinvent themselves to meet the changing needs of their communities. Provide support for all actors & cutting edge programs that are working to make our industry more democratic and inclusive. Provide universal rules and governance in low counterparty trust environments. Create value propositions that encourage industry players to foster accountability transparency and respect for privacy. It provides resources and technical help to our partners to build everyone’s capacity.

Every partner we have understands that their role is to collaborate with others, participate, and support and create. There are never going to be enough people or resources to do this work. We do this by sitting at the table and collectively decide what should be accomplished and what everyone at the table needs in order to be successful. Coalitions that serve to steer this know this isn’t “change”, this is transformation, for the technical revolutions of the 21st century.

It is critical that functionaries have their economic interests aligned with the correct functioning of the coalition. We believe that Coalitions are most secure when each participant has a similar amount of value held by the Coalition. Although today coalitions on Shyft Network are focused on formulating transmission across Trust Anchoring companies, in the future we hope to see application developers create new systems using coalitions.

We have built Shyft Network to uphold the following values; Publicly Verifiable — the system is distributed and publicly verifiable; Liquidity — users can move their assets into and out of the system; No single point of failure — innovation and novel features can be introduced with ease; Multiple Asset Type Transfers — System supports multiple asset type transfers on the same blockchain; Privacy — Trustless exchange, in a publicly verifiable but private way. We think that by building a framework for how entities manage cross-counterparty relationships and communication and providing the initial use cases to put these systems into use, we can enable developers, entrepreneurs and other parties to adopt these systems and continue to build off these cryptographic standards.

How do Coalitions work on Shyft?

Coalitions are structured by entities that participate in the Shyft Network, and that share a common set of rules and administration mechanisms for governance of roles along with rights-based permissioning. The formation of a new coalition begins with a “sponsor” participant and an additional participant chosen by the sponsor. These two are the first peers in the coalition and collectively can add additional members.

Our primary coalition focus right now is composed of Virtual Asset Service Providers (VASPs) participating in data collection & sharing. Shyft’s coalition infrastructure is designed to support complex relationships that define how VASPs communicate with one another based on regulatory, jurisdictional, reputational, or nearly any other conditional requirements. Shyft infrastructure is designed to help VASP coalitions agree on, and bind rules & requirements pertaining to business logic such as:

• the process within the coalition for communicating & sharing information, and
• types of information that can be shared based on regulatory & jurisdictional requirements.

VASPs that belong to, or form part of a coalition, are still allowed to conduct business with external entities; furthermore, VASPs & non-VASPs can act across an infinite set of coalition arrangements and formations.

Other examples of Coalitions:

• Regulated Exchange Coalition;
• Regulated to unregulated exchanges;
• U.S. based exchanges;
• Asia Pacific exchanges;
• North American Exchanges;
• Regulated exchanges to OTC desks;
• Securities exchanges;
• Regulated exchanges, and
• Exchanges that sit in similar KYC requirement jurisdictions.

Wrapping up

We are at an inflection point right now, where there is still time and an opportunity to work proactively with regulators, and help guide the rules, and design the systems that will not regulate the benefits of cryptography and decentralized systems away. The time is now to propose structures that transform analog rules, into digitized systems to govern a digitized world. Internet 4.0 is upon us and we need structures around them that are designed to map and adapt the collective future of our industry and the paradigm changes and values this technology has the potential to bring to the world.

This piece was written by Suzanne Ennis, SVP of Global Partnerships of Shyft Network.

Shyft Network aggregates trust and contextualizes data to build an authentic reputation, identity, and creditability framework for individuals and enterprises.

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