Zero to one enablers

The internet turns the world into a single global market.

Cryptography enables pseudonymous secure authentication.

Blockchains introduce a single shared source of truth.

Using blockchains, smart contracts enable market interactions in low-trust environments.

Thanks to those four enablers, the following holds true:

The internet, cryptography, blockchains, and smart contracts turn the world into a single global market, open to all participants, who can now remain pseudonymous since they interact with full assurance in low-trust environments.

Principles

Let’s go deeper into what those enablers unlock in the areas of legality, computer interaction and organizational structures.

First, smart contracts encode self-enforceable rules. Because of that, they create a new legality. A legality that is computer-native, fundamentally different from traditional legality.

Therefore smart contracts can and will achieve full sovereignty from existing legal systems.

Second, abstracting authentication using cryptography means pseudonymity is possible. But it also means that machines can interact with these new systems.

With pseudonymity and code-as-law, machines become first-class citizens.

Finally, smart contracts turn organizational structures into code. These new organizational structures are sovereign, global, and inclusive of pseudonymous participants.

Now let’s explore the effects that these principles will produce on society.

Effects

The Cambrian explosion of governance

All men are created equal was the rallying cry to dethrone kings.

As part of that ethos, one-person one-vote was born, bringing much progress to our society.

Democracy was born in a period when humans demanded individual freedoms. Society was extremely hierarchical and inequality was rampant. Feuds and oligarchies didn't age well, and the new era required a new way to organize society.

But now modern politics has reached its maturity point. It's now so entrenched into our society that it’s turning into entertainment, more than rational decision-making.

Everything has a finite life. If current political systems were a technological revolution, we would now see that they are clearly in its last phase.

In that last phase, we have already squeezed all the potential from the model, and a new model awakens.

Political elections around the world are showing us that the current model hasn't aged well.

Corruption accounts for more than $2 trillion per year. One-person one-vote has weakened as a principle due to illiteracy, data-driven manipulation, and echo chambers.

There is also no personal downside for taking blatantly wrong voting decisions, no skin in the game. One-person one-vote is a nice tool in the toolbox, but it shouldn't blind us from experimenting with more advanced governance systems.

We have also been tricked by the wrong metrics. We usually look at the participation rate or number of voters to measure the health of a governance system. But it's neither of those. It's the quality of the decisions that the system makes.

With that in mind, we can move on from all the prejudices we acquired about governance centuries ago, and experiment with new models.

The dark era of politics will usher the Enlightenment of governance.

Governance becomes empirical

With the advent of futarchy, objective governance will start to emerge.

We can imagine running entire countries with it, as Ralph Merkle envisions.

Governance has always been subjective, and it will likely continue to be that way. But with the advent of smart contracts, dry code has started permeating our world.

Dry code thrives on data. Network participants will be able to measure and predict the impact of governance decisions.

Markets for algorithmic governance will emerge. The brightest engineers will then focus on how to improve the way we make decisions.

The most important component of success is not working hard, it's making the right decisions. Through evolved governance mechanisms we will improve at making decisions, kickstarting a new era of abundance.

A merging of stakeholder governance and common goods

Stakeholder governance is one of the most proven governance models. Those who provide capital, labor, or any other valuable asset receive stake. With that stake, they can exercise governance power.

The model itself works. But it has lead to enormous wealth concentration. That's because only select investors could access the best market opportunities.

Crypto and public fundraising changes these dynamics. Every network participant has access to the same funding opportunities as the most well-connected VC.

Institutional investors will still have more capital to pour into these networks. But at least smaller investors will have the chance too.

The internet shouldn't be owned by a company. We are on that path with Google.

Mars shouldn't be owned by a person. We are on that path with SpaceX, which is currently majority owned and controlled by Elon Musk.

There is no doubt that Google deserves to profit from building part of the internet as we know it.

And there is no doubt that if SpaceX enables humankind to populate Mars, Elon deserves to profit from that.

But the crypto fundraising model is a great improvement that I hope can enable larger groups of people to own common goods, and to enable the public to profit from great investment opportunities.

With these new fundraising models we can also bring producers and consumers closer together. Users and network participants may also become governors of the network itself.

The internet becomes the ultimate jurisdiction

Traditional jurisdictions since the dawn of the agricultural age through to the modern era enjoyed rapid growth as their returns on violence increased. With decentralized organizations, the ability to exercise violence diminishes. With that, the returns on violence diminish as well.

This will cause traditional jurisdictions to re-think their place in the world. They will begin to take competition for citizens more seriously. Citizens, in turn, will use their newfound leverage to shop around for the mostly friendly jurisdiction that will accommodate their lifestyle.

Increasingly, citizens will opt out of traditional jurisdictions altogether and conduct more of their business entirely online. They will work for an internet-native organization, get paid with internet-native money, and go to an internet-native court in case of any business disputes.

The power of traditional jurisdictions will wane as the internet becomes the preferred jurisdiction for commerce.

Software eats governance

This paradigm shift requires new tools for human organization.

These tools need to be:

  • Fully programmable
  • Global by default
  • Pseudonymous-first
  • As trust-minimized as possible

Aragon meets all of these criteria. With Aragon, humans can now experiment with governance at the speed of software.

Eventually humans will create software that runs those experiments on their own.

Artificial intelligence will help us govern ourselves better than has ever been possible before.

Eventually, software eats governance.

Next reads on the Aragon One thesis series:


This post was a collaboration between

Luis Cuende, Aragon One

  • Luis Cuende

    Luis Cuende

    Co-founder of Aragon and CEO of Aragon One. Advisor to a few crypto projects that awake my curiosity

    More posts by Luis Cuende.

    Luis Cuende
  • Aragon One

    Aragon One

    Aragon One is a for-profit company that encompasses the foundational team working on the Aragon project. The company is currently established in Switzerland, although we want it to function as a DAO

    More posts by Aragon One.

    Aragon One