Due to the open source and permissionless nature, encryption protocols have reignited discussions about public products. In fact, the transparency and accessibility of the blockchain has reset the model of free transactions and alliances. However, although encryption protocols operate as open networks, if they consist only of private capital, are they truly public?
Scope, access, and ownership issues complicate our understanding of what is public on the Internet. Public goods also depend on common moral conditions, because any “goodwill” must be defined according to the value system of a particular community. For these considerations, this article proposes to strengthen the definition of “public goods” in order to serve others and achieve a long-lasting civilization.
Author | Toby Shorin, Laura Lotti, Sam Hart
Compilation | Bran, Gu Yu
Whether it is natural resources or human creations, public goods are flooding the world where we meet each other. We manage, share and maintain them as a society. Although they are imperfectly constructed or managed, these objects bring us together for dialogue, debate, and common concern. The natural landscape and the built environment are not only things, but also cultural contact points. They make us care about the public interest.
In economics, “public goods” refer to anything that is neither exclusive nor competitive, that is, people cannot be prohibited from entering, and one person’s use will not reduce another person’s ability to use it. Clean air is an example of a natural public product, while the power grid is a man-made public product. What are the public goods of today’s industrial knowledge society? Open source code that supports millions of companies and independent developers is often considered a public product in this way. Cypherpunk views privacy itself as a public good. Online media archives and open Crypto infrastructure should also be eligible, which seems natural.
Recently, Vitalik Buterin and others in the cryptocurrency community have begun to treat blockchain mechanisms as public goods. To be sure, encryption protocols are one of the most striking new institutional forms. Their unique capabilities stem from their “public” qualities: unrestricted membership and participation, open APIs, and transparent resources and powers. distribution.
But at the same time, many of their characteristics contradict the claims of public accessibility. If ownership is concentrated in the hands of a few whales, can encryption protocols be regarded as public goods? In layman’s terms, these market primitives are sometimes described as “public infrastructure”, but if blockchain now serves “public”, it mainly refers to a decentralized financial system. Fundamentally speaking, these token holders have only one object of common concern: price.
Therefore, although encryption protocols may conform to public goods in an economic sense, what is good for the public in these discussions? Some of the established goals of the crypto community are to solve large-scale coordination issues, establish post-state sovereignty, and create a level playing field on a global scale. However, to create a majestic and equal society requires a broader vision of public goods, not just what economics can imagine.
Ancient ruins used as public baths, Hubert Robert (1798)
The public baths of the Romans, whether rich or poor, can be used, which is the cornerstone of urban public health and rich cultural life. In its heyday, the Library of Alexandria had hundreds of thousands of texts and was one of the largest public repositories in the ancient world. Despite being exclusive in many respects, these miracles were the forerunners of public goods as we know them today. They point to the ideals of openness and universality.
As the builders of the new Crypto society, we must have a more inclusive and far-sighted concept of the meaning of “public” and “good.” As the protocol vault transitions to community management of public projects, it is time to imagine how cryptographic protocols uniquely construct public products.
01 Public scope
Our new understanding of public goods begins with exploring the concept of public. What makes a thing public? What is public?
Generally, “public” is understood as something that belongs to the people and can be used for free, such as parks, roads, and public land.
The strongest requirement for publicity of encryption protocol is based on the principle of open and permissionless access. Blockchain overcomes a key limitation of Web 1 and Web 2: They cannot meet the standard of inalienable access. The so-called “public space” on the Internet is completely different from the parks in our cities. They are just other people’s private servers, and you can revoke access at will. In contrast, encryption protocols deliberately enforce unhindered access.
But public goods are not just a means to enter public spaces. Another key definition is the public as a crowd, and its definition is related to certain political associations. In the United Kingdom in the 17th century, some uncensored media often accused the country of bringing together “private persons as the public” (Habermas, 1989). Less than a century later, the French revolutionaries meticulously planned the self-awareness of the new nation by organizing festivals, erecting monuments and designating new public spaces (Ozouf, 1975).
In both cases, political institutions have improved their status by establishing new storytelling venues. In these places, people can begin to identify themselves as part of the collective whole, that is, the public.
This notion of the public as a conscious entity is also deeply ingrained on the Internet, and the adoption of the Internet is driven by the publication and distribution of the media. Publishing online documents or software applications is more than just disclosing something: it is a public act (Warner, 2002). Sovereign currencies created by blockchain can of course be compared with sovereign countries, and their immutability means that APIs cannot be modified or revoked without broad consensus.
These ideas provide support for the concept of encryption protocols as public goods, but together they present a complex picture. Despite its “open” nature, the encryption protocol has not yet provided a satisfactory answer to the public domain it targets.
In today’s crypto ecosystem, token-based membership determines key considerations such as resource allocation, on-chain incentives, and off-chain decision-making. Although the censorship resistance of the blockchain seems to be a solution to the gatekeeper world, in reality, paid games restrict access in other ways. Agreements may be owned by thousands or even millions of stakeholders, but they are not in everyone’s interest-only those who have the time, expertise or resources to participate can benefit.
So, what does it mean to define the public as a group of users? The Web 2 platform provides us with an important lesson. The social media platforms that dominate the web today claim to be tools made for the “communities” of users who choose to participate-but these platforms also produce a wide range of negative externalities: the impact on third parties who do not agree to bear the cost. The externalities of the platform include infringement of personal privacy, the dissemination of misinformation, the devaluation of creative labor, and even the instability of the democratic process.
These influences are often considered to be the main motivations of people working in Web 3 now, and they have now established a sovereign space based on public responsibility.
Although social platforms provide an example of a misunderstood public, the nascent Web 3 “public space” has encountered similar problems in terms of definition, scope, and presentation. The equivalence of token share and voice in the crypto industry is reminiscent of early American democracy, where political representation is conditional on property ownership.
Under this system, only 6% of the total U.S. population is eligible to vote. Recall that the universal suffrage, human rights, and public services that we enjoy today are the products of those who have been excluded from the designated public fighting to represent their voices. In fact, the “anti-public” theory specifically targets groups that are not included in the larger public sphere, whose members may not be considered individuals (Warner, 2002).
So obviously, defining the scope of the public is the key to understanding what public goods mean. By equating public membership with currency ownership, we ignore important stakeholders and opportunities for alliances.
Today, the most important members of the cryptocurrency public are those who hold the most tokens, which means that even small holders are effectively excluded from talking about topics that are beneficial to them. In addition, there are people in this designated public who may hold radically different views of the public interest. By contacting the underrepresented marginal groups that make up the broader crypto community, we can gain a deeper understanding of the public we are building for and how to best serve them.
When we think of the public, we should think broadly. This is not to say that we must treat everyone in the world as part of our public. We also respect small, self-selected communities and trust-based groups, but by considering the impact we may have on marginalized groups (positive and negative)-whether it is non-participants, non-technical members, or future participation in this public domain People-we increase the potential for greater public interest and reduce the risk of negative externalities.
In short: To paraphrase Michael Warner, the public always goes beyond known agreements. The relationship between strangers is accidental in history and complicated in culture. The public is made up of friends you have never met, and you unknowingly share cultural coordinates with them. How do we build things that benefit most people?
To solve this problem, let us turn to the “goodwill” in public goods.
02 The moral foundation of public “goodwill”
How do we determine what is a public good? So far, we have begun to question who the public is. But even if we agree with the statement that the public = token holders, what does this tell us about this public? Who are these token holders? What beliefs do they hold together?
Consider a classic public product: a park. We can say that park visitors are usually “users” of this public space, but this classification is obviously unsatisfactory. “Users” did not capture the meaningful details of a population that collectively values free access to protected forests or coastlines. Why are parks more desirable than public parking lots? This brings us an important understanding: any definition of public goods is based on a common understanding of what is in the public interest and why it is done.
A social institution is not only united through what it uses, but also through many common characteristics, including geography, race, religion, taste, culture, history, and values. Therefore, even according to the definition of economists, public goods will always reflect the common background, common beliefs and moral sensitivity of certain groups. In other words, their value system.
Public libraries, public education, national cultural relics and clean tap water are the four public things that embody the moral foundation of public goods. The public library is built by a community that values autonomous learning and shared knowledge space. When a culture believes that the common foundations of mathematics, science, language, and history can enrich the lives of citizens, public schools are valued.
The state designates and protects historical relics because their people believe that their heritage has intrinsic value. Finally, we provide clean water for all people because we believe that all lives are of equal value. This humanitarian value is why stories like the Flint Water Crisis-infrastructure failures-are widely understood as humanitarian crises: certain lives are considered worthless and not theirs.
Each of these examples is based on a different idea of what makes life meaningful-based on the idea of what is “good faith” (Taylor, 1977). Public goods are non-exclusive and non-competitive, but more importantly, they are objects that satisfy shared values.
The above-mentioned four public goods are supported by social groups, and they have a common belief in their value to the general public. But how many people will see the “public goods” funded in the cryptocurrency field and see their value reflected? What are the common values of UNI holders or Ethereum enthusiasts?
The crypto community has a liberal spirit on the surface, in which “decentralization” usually represents the autonomy of the community. With the creation of wealth in the space, there is no reason why cryptocurrencies cannot create commodities for the different values of their different communities. But in practice, there is almost no room to discuss or formulate different values. This is why in the absence of a way to realize our common values, we default to using the lowest common denominator: profit.
Because there is no specific construction goal, the financial interests of large token holders are overrepresented in protocol governance. We believe that this constitutes a centralization risk. When agreement politicians are not authorized or formally responsible to represent anyone’s interests, but their own interests, the result is that homogeneous and self-interested groups of whales can decide what is considered good for the network. The encryption industry still does not have the concept of a “civil servant”.
So, what are the alternatives determined by the oligopoly agreement? Buterin, Hitzig, and Weyl’s concept of “free radicalism” is the basis of Gitcoin’s quadratic financing mechanism and proposed a model in which public goods are equivalent to market signals (Buterin et al., 2018). One might think that value is “priced” into this model. If people “vote on value with their U.S. dollars,” then the market acts as a tool to fund those values, whether the value is clear or not. In fact, quadratic voting seems to increase the relative voice of an enthusiastic minority.
However, although voting is symbolic, this model ignores an important fact: we do not discover common values through personal preferences. If public goods are to satisfy common values, then it is important to openly discuss what is valuable. Many agreements have learned a lesson in governance: Discussion and consensus building are necessary prerequisites for voting. Likewise, the discussion of values is as important as the voting itself, or even more important. Cultivate a value system by telling stories and negotiating in public discourse forums.
If we don’t want the people with the most tokens in the wallet to decide what is valuable, we need to empower different communities and explicitly incorporate different value concepts. In order to align economic interests with our own values, we need to establish a stronger coupling between our concept of public interest and how to make decisions on behalf of the public. If we want to build a lasting culture, members must identify with each other in a dimension that transcends “token holders.” We are a member of many members of the public, and we must create public products with a complete self-perspective.
03 New definition of public goods: positive externalities
So far, we have understood the complex ways of defining the public, which shows that extending our concept of the public to multiple parties may produce better public results. We have also seen that “goodwill” is based on common values in certain places. With these concepts in hand, can we establish a better definition of public goods?
The types of public products we need are those that can be formulated by the Crypto community while avoiding the destructive expansion effects of the Web 2 platform. As Facebook expanded its reach, it achieved more and more negative externalities in the form of propaganda attacks on democratic institutions. The public products developed by the Web 3 community should strive to produce the exact opposite effect. Larger scale should mean greater benefits, as more and more people are paying attention to: creating positive externalities.
This is a powerful new way to define public goods. In fact, the encryption industry has produced a powerful example: the widespread adoption of asymmetric encryption schemes. For many years, computer scientists and cryptographers have known that the large-scale adoption of public key encryption can enhance privacy, which is a value held by many people. However, despite the efforts of researchers to advocate the adoption of this technology, cryptocurrencies have driven mass adoption within a few years. Encrypted messages have changed from tools used by dark webs and intelligence agencies to demanding features for consumer applications and services.
Other examples of positive externalities of cryptocurrencies are more novel. Today, the core contributors of open source projects are still underfunded, even though the entire industry is built with their software. With the help of the infrastructure provided by companies such as Gitcoin and Radicle, the protocol library is ready to significantly expand the open source code funding inside and outside the cryptocurrency. We have seen signs of this shift as more private and public funds are being used to support open source development within and outside the crypto industry.
Similarly, standardized and open organizational APIs and citizen participation are the public interest objects of any contemporary liberal and democratic advocates. The open, unchangeable, and publicly managed API greatly inhibits the power of centralized organizations and grants agency rights to users, who can now decide their own interfaces and services.
If the blockchain puts pressure on centralized companies and governments to require their APIs to be open and irrevocable, this will mark a major paradigm shift towards accessible and accountable institutions. Finally, encryption protocols reintroduce the participatory governance of public systems into a part of daily life. We can only hope that one of the externalities of encryption is to raise expectations for transparent and easy-to-use local governance participation.
Each of these public goods, whether actual or potential, is an item beyond restoring economic significance. They satisfy the values of privacy, the virtues of freely sharing work, liberalism, accountability, and democratic participation, and incorporate the sense of interest shared by all parties other than Web 3 users today.
This points to a useful feature of our new definition. Understanding public goods as positive externalities allows us to treat people who are not normally classified as members of the public as our beneficiaries. This definition is in contrast to economic discourse, in which non-contributing users of certain public goods are regarded as “free riders”, indicating market failure.
When promoting the creation and consumption of public products-whether it is vaccines, public libraries or open source code-is clearly in the interest of society, how do we treat these users as “free riders”? The idea of positive externalities makes the interests of others self-evident. In fact, this quality is consistent with the credible principle of neutrality. Applied to public goods, credible neutrality indicates that there should not be any privileged class of “citizens”, and everyone should benefit equally.
Therefore, positive externalities are an important variant of a familiar theme in the crypto space: the positive sum game. So far, most natives of crypto have realized that relationships and value creation are mainly of this type, namely, games of construction, in which contributions have a synergistic effect. As agreements and infrastructure develop and culture is deeply entrenched, the degree of their positive externalities should also increase proportionally.
An interesting case study is fair start-up capital. Although this project does not explicitly set out tasks for the public interest, it hints at possible social models that deserve further exploration. In short, Fair Startup Capital is a small group of facilitators who fund promising projects. The founders of these projects must be willing to give up the founder’s token distribution, but distribute their tokens “fairly” in exchange for entrepreneurial funding. If the founders have gained some benefits in the process of deploying the agreement, they should continue to “pay forward” and fund subsequent teams to launch their agreement and distribute tokens in the same way.
The fair start-up capital model is interesting for several reasons. First, the facilitator does not directly obtain financial value; it exists to perpetuate the organization; second, the fair start-up capital is not a rigid infrastructure, but a social agreement, an institution that relies on dedication and the maintenance of value consistency; Third, the beneficiaries are different from those who provide services. This leads us to a surprising feature of this new type of public product: one way of expressing positive externalities is to treat the success of others as one’s own.
With this idea of positive externalities, what public products can we build and how? If public goods always serve a local set of values for certain user groups, we might find our best inspiration by observing the public that we have become a part of. In addition to our on-chain identity, we are from Berlin and New York. As citizens of these places, we benefit from parks and clean air, sanitation and public transportation; we are disturbed by over-regulation, deforestation, and slow deployment of vaccines.
Our membership in these local spaces connects us with people who share our needs, desires, and concerns. We will all benefit from more green space, high-quality low-cost housing, and easier access to health products.
The vision of a truly global DAO representing billions of people is an illusion. However, if we apply our “positive externality” principle to future citizens of our place of residence, then agreement-based public goods will begin to look more like community-driven industrial policies.
One of the most destructive potentials of Web 3 is the ability of entities with strong revenue mechanisms and using it to solve matters more important than themselves. The DAO can follow the tradition of the great social movements of the past and work outside the state government to build public goods.
The success of the 1966 Black Panther Party’s national plan to provide free breakfasts to black and white students in public schools forced the US state governments to create their own versions. This can be used as an example of how a non-state group that cares about local community issues can serve more public and promote positive externalities.
This is a model of regional work, but it can be extended to the global public. Like the expansion of suffrage, it sets a strong precedent for neighboring communities and cultures. By addressing concerns rooted in our region and establishing social models for others, we can promote truly global public goods.
04 From ecosystem construction to world construction
The Ethereum project envisions a “world computer”, a coordinated system that promotes global prosperity. In 2016 and 2017, we joined the cryptocurrency field with thousands of others, with the ambition to make society a better place. Now most of us are stuck in checking our portfolio balance. Have we forgotten this core belief?
Each of us is a beneficiary of the public goods of the past. These magnificent projects make us humble—the cathedral, the Grand Canal, sanitation facilities, the increase in literacy rates—and they tell us that the “good or bad” of public goods is also measured by its lifespan. In order to match these great works, we must expand our time horizon. We want to ensure that positive results are achieved not only for token holders or protocol participants, but also for the world that expands with these infrastructures. How can we use the immutability provided by encryption protocols to create things that live longer than us, thus forming a long-lasting foundation for civilization?
To answer this question, we only need to consider the public products that meet this definition today: permanent land reserves, global seed banks, and the Internet as a global basic communication technology. These are not only public goods, but also cultural customs that allow these products to be passed on from generation to generation. . Public goods are formulated by social institutions, which replicate behavioral patterns in accordance with the public interest.
Encryption protocols provide social institutions with the cornerstone to prepare to meet the challenges of today’s network culture. Many people are already looking for ambitious and influential ways to spend their billions of dollars. Not only financial value flows in these crypto economic systems: people’s time, attention, and energy are all resources that can be guided.
However, most of the content in cryptocurrency today is a self-referential and self-service money game. “ETH = money”, “funding diversification”-these are concepts that are fundamentally linked to profits. But what’s the use of money? The U.S. dollar has no responsibility to profit for its holders. Cryptocurrency is a currency tool, not a business.
As token holders, we have the right and responsibility to ask what these assets should be used for-and the risk is high. The shape of society in the 20th century was determined by companies that were clearly driven by a pure profit value system. Do we want the next generation of agreement-based institutions to produce the same results? The type of social organization we need is not a chain company, but a container for holding different ideas of capital and companies.
We have seen this in today’s agreement-granting agency, which allocates the responsibility of the treasury funds to smaller groups with targeted public goals. Imagine the power of the entire agreement operating on this principle. Our ambition is far more than serious token voting. We hope that the entire community can redefine the issues of public concern. The opportunities before us are greater than any agreement. In today’s world, capital is not scarce, and the ambitious vision for the welfare of the public is.
As always, we are very grateful to everyone who has guided our ideas in other Internet peer reviews. We especially thank Bryan Lehrer, Kei Kreutler, Callil Capuozzo, Jay Springett, and Arthur Roing Baer for driving our thinking. We would also like to thank Dena Yago and Carson Salter for clarifying and strengthening our arguments, and Klara Kofen for enriching our historical record.
Thanks to Maria Gomez, Jerry Brito and Chris Burniske for having an enlightening conversation on this topic last year. Finally, thanks to Scott Moore and Kevin Owocki, and the entire Gitcoin team, whose commitment to the public good continues to inspire us.