My mom is a smart lady but she’s not an avowed cypherpunk or CS professor. Here’s how I explain Tezos to her.
Over the last five years, cryptocurrencies such as Bitcoin have come into some popularity. To date, the cryptocurrency market is ~$13bn across the leading efforts in the space. These projects can serve many uses, like offering a native digital asset of the Internet or providing alternative stores of value for the unbanked/those subject to poor monetary policy.
These applications are powered by a blockchain. In a cryptocurrency, a blockchain registers and validates transactions in a public ledger, removing the use of a third party to maintain a registry of who-owns-what by running a global protocol to evaluate and store transaction information. Blockchains allow many different parties to come to consensus on the state of asset allocation.
Ironically, this really sophisticated piece of accounting software currently offers no way to come to consensus about the rules that govern it. That is, when a new feature needs to be added or amended, it’s impossible for the users to coordinate updates on the blockchain because there’s no “governance layer” to act as a forum to move the blockchain along. As a result, innovation in the space has been relegated “off-chain”, where either feuding parties lack a means to convince the network of the merits of their upgrades — resulting in stasis — or enclaves of influential developers govern the codebase in an oligopolistic fashion.
In 2014, my husband and I identified a lack of governance mechanisms in cryptocurrencies as a destabilizing vulnerability. Our solution to this is to fold in a mechanism for enforcing protocol changes/upgrades onto the ledger itself. It’s sort of like a digital game of nomic, a game in which changing the rules is a move.
With our technology, we can amend technical aspects of the network but also instantiate rich governance rules through the use of formal proofs. Writing programs is error prone but, with some effort, programs can be given a mathematical treatment to prove that they do what we want them to do. If we want to cap the issuance of tokens at a certain amount, we can make sure that all proposals to the network satisfy this cap mathematically before allowing users to opine on the code. This replicates the logic of constitutional amendments in the US.
Bitcoin and other cryptocurrencies are a powerful tool for programming value. However, without a way to enhance themselves in an open and transparent manner, they will be crippled by the types of centralized politics that currently stagnates innovation in the Internet. Decentralizing governance is a potential solution to this problem, one that we’re trying to help realize with our team.
