Bitcoin 2.0: The Peer-to-Peer Economy Has Arrived
EspañolThink of a website like eBay, where users can offer goods and services, but instead all the information about sellers and products is managed through a decentralized peer-to-peer network (P2P).
No one really “owns” the platform; it has neither dedicated servers nor a physical location. The database is stored in encrypted form on different computers all over the world. Instead of earnings from commissions on sales going to a traditional firm, an incentive system splits them between those who provide the necessary infrastructure to keep the P2P platform running: nodes who deal with the storage, update, connectivity, and validation of the database containing information about users, products, and transactions.
In such a business model, the only personal information you truly need is the address where the product will be sent to, in the case that physical goods have been sold. When buying digital goods or services, like design or programming, the transaction can be successfully carried out without any party knowing the physical location of the other.
The same goes for the “employees” of the platform. After all, there is no office or storage facility for a government to shut down if the peaceful and voluntary trade runs afoul of some local or federal legislation.
This sort of arrangement raises some interesting questions:
- Who runs or is responsible for this “virtual” or distributed organization?
- Under what legal jurisdiction does it fall?
- Who is the owner of the organization?
- What labor codes apply to those who receive a salary from it?
Bitcoin: The Missing Piece
While P2P technologies have been around for a while (e.g. BitTorrent), it wasn’t until bitcoin‘s emergence that direct peer-to-peer money transfers became a viable option. Traditional alternatives like PayPal and banks not only refuse to operate with “non-official” entities without established geographic locations, they also centralize a tool that is essentially decentralized, eliminating most of it benefits.
It was only through the growth in infrastructure and liquidity of bitcoin and other similar solutions that these decentralized organizations became something more than an experiment.
Decentralized Autonomous Organizations
Even though I disagree with the label, organizations like the one described above are generally categorized under the umbrella of “Bitcoin 2.0.” Depending on specific features, other names will vary, such as autonomous agents, decentralized autonomous organizations, decentralized apps, and decentralized autonomous corporations, among others.
Each system’s behavior is predetermined through a set of rules defined by their creators, but once they’ve been set in motion, the platforms function without their intervention. The creators of the platform could even abandon the project altogether, and its function would not be affected whatsoever. Most of the time, these are open-source projects where operational improvements are incorporated through periodic updates and revisions.
In some cases, as with BitShares, there’s additional complexity that involves the distribution of shares and dividends. There can also be elections or plebiscites among the shareholders to decide on operational matters, such as whether or not to hire people to perform tasks that are not yet automated, like marketing.
All of this is possible without any legal structure, at least in the traditional sense. Shares are registered in the distributed database, and share transfers do not require anything more than a new data entry.
The majority of these autonomous and decentralized organizations are nothing more than examples of the revolution predicted by the cypherpunk movement years ago. But just like music, books, film, and soon even the financial industry, has had to adapt to the times, we may be seeing the beginning of a fundamental shift in the way we conceive of businesses and organizations: without borders, nationalities, nor bureaucratic government registries.
Translated by Daniel Duarte. Edited by Guillermo Jimenez.