Author: StJohn Piano
Published: 2021-05-02
Datafeed Article 221
This article has been digitally signed by Edgecase Datafeed.
This article has been digitally signed by its author.
1760 words - 302 lines - 8 pages

Blockchain performs a transform on the world of information. Trusted transfers can now, to a very surprising extent, be programmed and automated. The implications of this are... very great.

What does the concept of "a company" look like, after this transform ?

After long meditation and experimentation (and reading, and more thinking, and listening to what others have had to say), I have concluded that it looks very like this:

- A company is now a blockchain.

- Usually, this will be a proof-of-stake blockchain, in which new transactions and blocks are approved by some sort of voting scheme. [0]

- The blockchain is periodically timestamped in the Bitcoin blockchain via hashing its latest block into a private key, deriving a Bitcoin address from this key, and tranferring some bitcoin to it, thus making the company blockchain, and all the data it contains, immutable. This could be accomplished most cheaply by publishing new blocks as articles on a blockchain datafeed (e.g. Edgecase Datafeed).

-- Note: A datafeed is a blockchain designed to publish generic data.

- The company releases a software client, that can be used by a third party to verify its blockchain, i.e. confirm that all new transactions and blocks were approved using the programmed ruleset. The ruleset should include provisions for its own amendment, much like the "Articles of Incorporation" documents that are used today.

- Equity in the company == ownership of its coin in your crypto wallet.

- To transfer equity, simply publish a transaction on the company blockchain, using your crypto wallet.

- More complicated ways to transfer equity, e.g. vesting and stock options, can be encoded (carefully) in the ruleset. The Bitcoin blockchain can be used as the clock.

- Incorporating a company == Publishing an article on a datafeed. This article must contain the company public key, with which all company transactions and blocks are signed.

- The company treasury will consist of one or more crypto addresses. An initial Bitcoin address will be sufficient. This should also be published, perhaps in the initial incorporation article.

- As the company grows larger, it may:

-- Switch to a new company public key and new treasury addresses, which use M-of-N multisig, so that the company is not crippled by the death or defection (or kidnapping) of a sole director.

-- Publish articles containing labels and hashes of its code, technical documents, archive files, etc, which are hosted on other services.

-- Publish articles containing its employment contracts, and any other contracts. These contracts would be transactions. If they are sufficiently important, they could be published alone in their own block, for ease of reference (i.e. "browse to block 574 - it's the merger contract").

-- Publish its blocks on multiple datafeeds.

-- Start its own datafeed, to publish both its own blocks and its own media (e.g. interviews, useful articles, reference material, technical documents).

-- Offer its coin for public trading on an exchange. This, in effect, would be "a company going public". Most trades would occur only on the exchange (which would be a separate blockchain), with periodic final settlement being achieved via transactions on the company chain.

-- Run its own nodes, each of which backs up the entire company blockchain, and offers an API for convenient access to the blockchain data.

-- Release "light node software", so that its partners can run light nodes, which contain a rolling window of recent blocks, for notifications, alerts, balance tracking, etc.

So: A company can start out as an article, and smoothly grow as necessary into a series of active nodes, with a coin available for public trading.

Eventually, this all gets standardised, and a lot of the tools become off-the-shelf components. It's likely that existing companies will integrate these tools, step by step, until one day they discover that they have transformed themselves into blockchain companies. (The same thing happened to banks: They gradually moved from paper systems to computer systems, and eventually discovered (reluctantly) that they had become software companies.)

There are several major advantages for participants:

1) Perfect visibility of identity, ownership, participation, votes, etc. Many of these are also mechanically calculable. For example, a blockchain-based board vote or cap table can be entirely processed by computer, rather than by hand.

2) Resistance to "deplatforming" or "cancel culture". Deplatforming is possible only because the single authority in charge of a centralised app has the option to kick any participant off the platform. A blockchain company allows the founder to delegate the "right to participate" to new players [1] in a way that is cryptographically protected, not just socially and/or legally protected.

3) Direct control of shares / money / votes from a personal crypto wallet. More details: The Blockchain-based Internet. Various important operations can now be done securely from anywhere on the planet, whereas before you had to jump through lots of bureaucratic hoops (partly because it's very difficult to prove identity remotely without using public keys).

Note: Most other types of organisation can be implemented in the same way. This includes charities, non-profits, security forces, towns, cities, water management conglomerates, asteroid mining ventures, sports teams, etc.

Now for the really interesting part: There is no essential difference between such a company and a state. A blockchain state would operate in exactly the same way. It would just operate at a larger scale, and handle much larger transfers and contracts. Blocks would probably be infrequent (e.g. 1 per week) and would be signed by thousands of stakeholders. Diplomatic treaties become another type of contract. Smaller blockchain companies can incorporate and operate within the jurisdiction of a blockchain state, and will pay fees for the privilege of doing so.

So, that's the blockchain-based future, as far as I can see right now. A fractal series of chains, all timestamping themselves on larger chains (i.e. "paying tribute"), until the timestamps get right down to the bedrock foundation chain, Bitcoin.

Note: We might end up with multiple Bitcoins, each of which uses the same structure but a different set of algorithms, so that mining equipment only ever works on one chain. Then, at the bottom of the fractal tree-of-chains, there would be several chains, not just one, for the final timestamping step.

The race is on.

The churn begins again. [2]

The game is starting over.

Are you ready to play?

The new blockchain states will emerge from among the first blockchain companies.

They will be new incarnations of the East India Company and the VOC (see A Brief History of the Joint-Stock Company), and they will conquer the planet, and perhaps settle new stars.

Why am I so confident? Because the other high-tech technological approach to "organising human activity" relies on huge government-backed centralised apps (the UK Companies House website, for example, is a centralised app), which are chokepoints that are now increasingly subject to insane political demands (demands that essentially reduce to "stop anything bad from happening ever", which is the demand of a child, not of an adult, and if children are in charge then everything begins to disintegrate). These demands used to be held at bay by the human social networks that were generated and maintained by offline human interaction, but these networks have been short-circuited by The Current Apocalypse.

Conclusion: Our current system is busily making itself unworkable. Blockchain companies, if designed with some care and ambition, will steamroll over all opposition.

Alternatively, if we don't get blockchain companies up and running, we'll be stuck living in a more passive-aggressive, less competent version of the Soviet Union [3], followed in due course by a combo of idiot barbarian warlords [4] + Chinese Hegemony [5] This would have been the natural sequence of events (the cycle of empire follows its own remorseless logic), and it was the one that I was expecting before I read the original Bitcoin paper. However, we now have a Darwin-given chance to roll the dice again, and see what happens.

... When the jungle tears itself down, and builds itself into somethin' new...

[start of footnotes]

Very rarely, this might be a new fundamental protocol, that uses a mining scheme. Mining is useful for protocols that are "crucial planetary infrastructure". As long as they each use a different mining scheme, miners on one protocol can't do a "sudden mining power attack" on a different protocol.

Hm. In a very real sense, Bitcoin, the first "planetary infrastructure" blockchain, is a globally distributed company, whose shares are tradable coins. Many people now work in a distributed, semi-organised fashion to defend the interests of the Bitcoin chain, and thereby defend their own interests.

Note: "mining" is also a voting scheme, it's just the simplest (and therefore the most robust) voting scheme in the computer network environment: "computing power" is converted mechanically into "number of votes".

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I'm not using the term "player" lightly. I think that a lot of the social & mechanical aspects of video games are going to spill over into this environment.

It's possible that the most useful way to think about a "blockchain company" is actually to use the term "blockchain community", and to consider the founder to less like a CEO and more like a mayor, or a guild chieftain.

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Amos: This boss I used to work for in Baltimore, he called it the churn. When the rules of the game change.

Kenzo: What game?

Amos: The only game. Survival. When the jungle tears itself down, and builds itself into somethin' new. Guys like you and me, we end up dead. It doesn't really mean anything. Or we happen to live through it, and well, that doesn't mean anything either.

- The Expanse S01 E07

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Suggestion: Read The Factory Director in the U.S.S.R. by Raymond A Bauer and see if any of it seems familiar.

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Doesn't matter what skin colour they are, they'll all be pointlessly dumb and violent. The latter-day Western Romans had no desire to rejoin the by-then-utterly-insane imperial system, but living under the Dummkopf German chieftains wasn't all that much fun either. For a first-hand account, see The History of the Franks by Gregory of Tours, or alternatively this excellent lecture on that book:

Title: 10. Clovis and the Franks
Lecturer: Professor Paul Freedman
Link: www.youtube.com/watch?v=3uMZVj5b0Qo
Channel: YaleCourses
Date published: Apr 5, 2012

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The Chinese have been living under the "centralised government-backed app" approach to life for a really long time. They're well-adapted to it by now, and they'll win that game easily.

[return to main text]

[end of footnotes]