Bitcoin: the (im)perfect democracy

“Democracy is the worst form of government, except for all the others” – Winston Churchill

It has often been said that while representative democracy grants power to the people, it can be quite dangerous if used incorrectly and might even lead to undesired results with the elected representative/s perhaps not being completely up to the task (honestly I’m not looking at you, Donald!). This in turn begs the question of whether the Athenians had got it right the first time round: was direct democracy far more effective than the indirect version?

It is very interesting to note that voting power was pegged to a quantifiable, objective value: land, ergo economic power. Those citizens who owned land effectively owned a piece of the country itself, and therefore it was deemed that it was only in their best own interests to vote diligently, as doing otherwise would mean that would be harming something in which they have a valuable stake: the country itself.

Enter Bitcoin, which follows what I’d call a developed version of Athenian democracy. Bitcoins can only be created through mining, a process where computing power is expended to solve a complex mathematical calculation and in turn be rewarded in Bitcoin. Moreover, miners serve to secure the network against external attacks and verify all the transactions taking place. Retaining such an important role in the network, it is only fair that only miners can vote on any proposed changes to the Bitcoin network. Anyone can become a miner, but to do so you need to possess intermediate technical knowledge as well as requiring an investment in mining hardware. Thus, Bitcoin has added an extra requisite to become a voter in its system apart from economic power, that is technical know-how.

This means that almost all voters in the Bitcoin network know the consequences of their votes and seek to act in the best interest of the network, as doing otherwise would mean losing profits and devaluating the currency which they hold. Of course, such an idyllic form of direct democracy has led to one of the most bitter feuds so far in Bitcoin’s history, namely the Segregated Witness vs. Bitcoin Unlimited war. However, bribery and misinformation had a part in Bitcoin Unlimited’s success so far, and while we can hope to vastly improve systems such as voting thanks to the blockchain technology, doing away with human greed remains a pipe dream.