In the Future, Ownerless Companies Will Live on the Blockchain

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Among niche groups of computer scientists, the buzz surrounding blockchain has reached levels normally designated for Elon Musk. The technology is in its early and technically complicated stage of development, but experts say it’s poised to transform global commerce. Thanks in part to the widely publicized Bitcoin, a cryptocurrency built on its platform, the blockchain is creeping out of computer science obscurity into public awareness.

If you’re not yet familiar with it, you will be.

blockchain-ownerless-firms-4Blockchain has been called “the most disruptive thing I’ve seen in my career” by Salim Ismail, former head of Yahoo’s Brickhouse incubator, and a platform whose “consequences are hard to overstate” by Marc Andreessen, the elite Silicon Valley venture capitalist.

At its core, the blockchain is powerful for one reason: It solves the problem of proving that when someone sends you a digital “something” (like bitcoin for example), they didn’t keep a copy for themselves, or send it to 20 other people. Maintaining this type of ledger of goods and services is a remarkably important aspect of global economics. It’s a problem we invest billions of dollars trying to solve. Fundamentally, banks, auditing firms, legal services, and security systems are designed to authenticate the transactions that ripple across our planet.

Like the internet democratized the exchange of information, transforming entire industries in the process, the blockchain promises to democratize the exchange of value, a concept with staggering possibilities.

Though it’s not quite ready for the mainstream, hundreds of millions of dollars are pouring into startup companies building user experiences that, in the coming years, will deliver blockchain to the smartphones of billions.

As managing partner of Blockchain Capital, Brock Pierce has reviewed hundreds of early stage companies in the space. At a Singularity University program, I had the chance to hear Pierce’s vision of our blockchain future and chat with him about its long-term potential.

Pierce vocally stresses the division between Bitcoin and the blockchain technology powering it.

He says, “in the same way that we don’t refer to the internet as ‘PayPal’, we should be clear that ‘Bitcoin’ does not mean blockchain. PayPal is just one service built on top of internet protocols—Bitcoin is similarly built on top of the blockchain.” Pierce goes on to stress that “while Bitcoin itself may not stand the test of time, we can be sure that the blockchain is not going anywhere.”

Central to Pierce’s vision are “smart contracts”—contracts on the blockchain that can be programmed to self-execute in various ways. Pierce outlines the following scenario.

“Let’s say you bet your friend that it will rain tomorrow. You can write a rule that says that this money goes to whoever correctly predicts tomorrow’s weather. The next day, that money can check an online weather service and automatically send itself to the correct person’s account.”

That would be a significant accomplishment for a lifeless financial instrument like a dollar bill. Humanity has never been able to inject assets with the “smart” powers of software.

For the first time, we’ll be able to render static units of value—like dollar bills and physical contracts—into more autonomous, self-directed systems. Technologically binding smart contracts would bypass the need for sprawling financial back offices and expensive legal systems requiring lawyers, judges, auditors, and insurance professionals. Imagine a scenario in which a land title could check an online registry and automatically send itself to a new owner, eliminating a need for expensive title insurance to verify the legitimacy of the transaction.

These are just a few obvious applications. It’s hard to fathom how else programmable value exchange could be interesting. The following thought experiment was offered to me by a University of Amsterdam cultural analysis PhD candidate, Alix Rübsaam:

“Individuals might have an opportunity to program their ethics and values directly into autonomous savings accounts. One might design an account that automatically donates to relief efforts in the case of any or certain natural disasters, thereby removing the need (or even the option) of a case-by-case donation decision.”

If that example holds true for individuals, the same concept might work for aspects of congressional budgeting. Imagine that a portion of FEMA’s funds were programmed to check a Hurricane’s status, and in the case of a Category 5 storm that makes landfall—it could allocate money to the correct local offices.

At a basic level, corporations themselves are fueled by contracts. We may live to see a new era of business and commerce built upon a more automated legal framework. Legal scholars and computer scientists have pointed out that an ecosystem of self-enforcing contracts would give rise to what are called distributed autonomous organizations (DAOs).

As Matt Ridley writes in his new book The Evolution of Everything:

“[These] are not just driverless cars, but ownerless firms. Imagine in the future —summoning a taxi that not only has no driver, but that belongs to a computer network, not to a human being. The network has raised funds, signed contracts, and taken delivery of vehicles, even though its headquarters is distributed all over the net.”

An entire machine-powered ecosystem of commerce could develop on the blockchain. Brock Pierce envisions a world where a network-owned drone service might power its units from network-owned charging stations. Supply chains built on top of such a system might further reduce the costs of delivering goods anywhere in the world.

Primavera De Filippi, a research fellow at Harvard Law School’s Berkman Center for Internet and Society, raises questions of liability:

“Who is actually in charge, responsible, or accountable for their operations? If their resources cannot be seized (since DAOs have full sovereignty over them) how can they be required to pay damages?”

She, and others, are further researching the legal implications for autonomous companies.

Software is, as Marc Andreessen says, “eating the world.” The blockchain may then deliver the software smarts to eat away at parts of the economy we hadn’t considered. If tomorrow’s companies do own themselves, an entire machine-powered ecosystem of business transactions will emerge. It’s a mysterious future to fathom, but like the internet before it, human society after the proliferation of the blockchain will be as unfamiliar to us as anything we’ve experienced.

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Aaron Frank
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Aaron Frank

Aaron Frank is principal faculty at Singularity University, where he lectures on augmented and virtual reality. He is also a technology writer with articles in Vice’s Motherboard, WIRED UK, and Venturebeat.
Aaron Frank
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Discussion — 13 Responses

  • Kyle Webster February 16, 2016 on 11:56 am

    Thanks for the article! This is the stuff I think about – I need a copy of “Evolution of Everything” apparently.

    Imagine a municipality that builds a DAO to support, develop and operate a robotic system that provides maintenance, construction, transportation, or other services. It could provide critical services needed by that municipality at cost, and also be rented to private interest at the push of a button. Cryptocurrency can then be exchanged by robots and devices as needed for repair, acquisition, maintenance or upgrade. After its basic programmed “duties” are fulfilled; any extra money generated by this system could then be taxed.

    Now lets talk about basic income ><

  • Alan Hucks February 16, 2016 on 9:27 pm

    If crypto currency miners get rewarded with Bitcoin for authorising transactions in the block chain how does this work with other applications like mentioned above?

  • Gustavo Reis February 17, 2016 on 2:45 am

    Alan Hucks : it doesn’t. you can attribute whatever type of reward per transaction you want (or none) with blockchain. Anybody has any more references on the subject?

    • Alan Hucks Gustavo Reis February 17, 2016 on 1:55 pm

      Thanks Gustavo. I see that the current mining setups will benefit from verifying blockchain transactions by earning cryptocurrency – nothing changes there.
      If we see the increase of blockchain applications being used then there will also be a corresponding increase in the amount of cryptocurrency being traded.
      With the energy being consumed to run processors and the exponential rise of blockchain, what are the future challenges we should be addressing?

  • Tyler Welmans February 17, 2016 on 4:03 pm

    THIS. Great post. Blockchain offers a world of opportunity, but brings with it some BIG challenges.

    How will we react when autonomous programs begin hiring and firing us, or when (through faulty or deliberate programming) they cause harm, discriminate, fail to pay appropriate tax, fail to respect international sanctions, or buy the rights to a unique medicine and immediately hike the price by 5000% (oh, wait).

    Legacy regulation such as the EU ‘right to be forgotten’ is another good example – in a new world of information permanence, in which there is no ‘data controller’ (or any way at all) to archive or delete historic records from public infrastructure, there are some significant challenges to companies (autonomous or not) hoping to manage customer-related transactional activity over public ledgers.

    Dig deeper and you will find people working on entirely new governance structures, with autonomous entities intended replace entire governing bodies, enabling policy to be transparently enshrined and even applied directly on the blockchain based on popular consensus. Far fetched, but damn interesting.

    As you say blockchain is still a technology in it’s infancy, but given the scale of the non-technical challenges (education, process change, compliance, regulation itself), I suspect the technology may yet be ready for the people before the people are ready for the technology! The hurdles are high, but the prize is great. Exciting times. And did i mention it all starts with identity?

  • andrewmartz February 18, 2016 on 6:16 am

    This is an interesting concept. It makes me ask the question: since companies are by definition a creation of law, isn’t there always at least one person behind all of it? This sounds a little bit like the Wizard of Oz.

    Also, since companies are potentially perpetual in lifespan, this seems almost like it could result in a giant game of monopoly where one company ultimately owns everything. Is antitrust law the only thing that stands between us and total subservience to an ownerless AI company in control of resources?

    If AI outsmarts us at our own games (it already beats us in Chess and Go) will it be a benevolent or tyrannical…? I imagine how we design and build that is up to us.

    Human centered design takes on a whole new meaning.

    Food for thought, anyway.

    • shaker andrewmartz February 26, 2016 on 5:08 pm

      I suspect that the people who “create” the company would be the ones paid by the autonomous company via shares. Also, you can start an open source company and receive payments via shares as well.

      These are certainly very very interesting times.

      I believe blockchain is one of the greatest inventions in the history of mankind.

      Decentralized computation that controls a zero sum network that only goes forward in time sounds an awful like universe itself. I believe we are moving towards a more “universal” approach to systems building that will change everything – and I mean everything.

  • Bastian Blankenburg February 18, 2016 on 9:22 am

    While I see how blockchain enables secure transactions with less overhead than now, I don’t understand how it can impact/automate the decision making processes of organisations as described in this article. Such organisations have been researched for decades now in distributed AI/muliiagent research, with or without blockchain, and still far away from general applicability in all but the most constrained environments (the game Go might have a huge configuration space, but it’s still a trivially simple-to-describe environment compared with the real world).

    Now blockchain maybe takes some headaches out of secure protocol design for electronic and autonomous market participants (“agents”). But for the system to work on random facts like, “there really has been a hurricane of strength x at place y and time z”, and not just monetary transactions, many of the current challenges in agent system research still need to be solved.

  • TheFuturePrimative February 20, 2016 on 12:31 pm

    And who owns the “blockchain?”

    It should not be lost an anyone, regardless of your political allegiances, that the current “war on cash” dovetails too well with the current house of cards built by central banks and their prime bank shareholders.

    While everyone is in favor of reducing the cost of work – even at the stake of massive dis-employment, the “blockchain saviors” insist on becoming the overlords of all commerce in the years to come – a world of equals, where they will be a little more equal than everyone else – hovering in an untouchable state of extra legal authority and protection.

    This is not just about digital money, but also what taxes are paid to whom, why and who will even be allowed to do business in this dark future.

    Give your soul to the Singularity, but Nature always finds a way dissolve the dreams of gods and kings.

    One need only look at the current state of medical treatment in this age of super science and big government.

  • Michael Harmon March 10, 2016 on 11:57 am

    Great article, but why let Brock Pierce imply his mastery of the blockchain while obscuring it’s real origin. Both the author and Pierce are associated with Singularity University and thus the author should be much more careful about conflict of interest both his and Pierce’s. Pierce is managing partner with this new blockchain company and wants to take all the credit.

    Pierce distances Bitcoin from the blockchain saying it’s like PayPal and the Internet? That’s a pile. First off, the only reason Pierce has access to the blockchain at all is because Bitcoin inventor Nakamoto invented blockchain and made it public domain for his project. Secondly, Pierce has no real footprint in the biz compared to Bitcoin so the author needs to point out the context behind this man’s claims and reality. As it is, this is just corporate advertising.