Achilles: Hi Tortoise, I want to give you a chunk of something that I’ve been working on, The ADAO. Its currency — adacoins — are similar to a share of an art-collective but over time will hopefully develop incredible value.
The Tortoise: OK…. What am I supposed to do with it?
Achilles: Four things actually. First, find a few people you completely admire who are doing work to save the planet and give them a few adacoins. Second, hold onto the rest, because the whole point of this is that the artists and social do-gooders finally get some upside in the incredible value they create and that happens with scarcity. Third, I need you to promise that you are going to sell something or your part of your labor you’ve made for adacoins. Fourth, if you really, desperately need cash at some point in the future, sell a few adacoins. If you and everyone else who has adacoins does this, we’ll have made something that makes a lot of artists richer. But more importantly, the ADAO is a democratically run philanthropy fund, so lots of other artists and social do-gooder types will thrive as well.
The Tortoise: OK… but why do we need a democratically run philanthropy fund?
Achilles: When you think about how most people and organizations in the world get money, it’s because they make something or provide labor that other people want to buy. That’s the market. But lots of activities in the world don’t have immediate market value. Helping poor people is usually not profitable and hence, we give Nobel Prizes to very clever people like Muhammad Yunus that somehow figured out how to do to social good AND make a lot of money. Hence, we usually rely on governments and wealthy patrons to fund the arts and other social and research activities. I’m super happy these mechanisms exists and lots of great folks have benefited from them, but they are rarely democratic or community led. A few — generally very well meaning — people in government or foundations get to decide where the money goes. That’s OK but not something in which we all participate and influence.
The Tortoise: OK — what does all this have to do with bitcoin and the like?
Achilles: In short, imagine if we just sectioned off a portion of the currency supply and said “30% of all the money in the world is a huge philanthropy fund.” If the bitcoin and ethereum founders had done this, they would have created two of the largest charities in the world, with assets worth more than $10 billion. What’s crazy is that because these are virtual currencies and were essentially created out of nothing — sectioning off chunk of the currency at their inception would have cost them nothing and likely would not have affected their popularity or utility. It’s a huge wasted opportunity.
The Tortoise: But wouldn’t that just be another non-democratic quasi government fund?
Achilles: That’s the part where new-fangled tech comes into the picture. Ethereum allows virtual currencies to have contracts built into them, so we can then make up the rules of how this huge fund would get run and currency itself enforces them. So we can code how we want the organization to run into the fabric of the currency itself.
The Tortoise: But do we really want democracy in art? Last time I checked, aren’t most online polls and contests totally hacked and taken over by trolls and whomever buys the most facebook ads?
Achilles: This part is tricky. Democracies — especially digitally experiments in democracy — get hacked. The original DAO — the first Democratic Autonomous Organization — was hacked and forced Ethereum itself to be forked. But does that mean that the entire idea of democracy or even a democratically run organization is flawed? Not at all. Of course, if potential thieves see something has a lot of money and power, they are going to try to attack and steal from it. So we have to protect ourselves against them and evolve our operating models so that we not constantly funding people like racist artists who get very good at voting for their friends. This tension between enabling the people to make decisions for themselves and preventing the angry mob from hurting everyone else is older than Tocqueville and the French revolution. It’s why successful governments have checks and balances and why they invent mechanisms that are hard but not impossible to change how they operate (e.g. changing the US Constitution requires super-majorities). If the ADAO takes off, we’ll have to spend a ton of energy and money on security and tweaking how pure our democratic funding process should be. That’s OK though — that’s the evolving democratic experiment applied to virtual currencies and arguably, an important societal and artistic intervention in its own right.