

FAQs around the blockchain context: Let us build the common ground.
Oct 5, 2024
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Hello, there! I believe I would greatly benefit from this post, as a job market candidate whose doctoral dissertation focuses on the applications of blockchain technology, a field often considered complex by the general public. Any questions or requests for clarification would be immensely helpful.
Horizons from Afar: The Tale of AI Through Technological Breakthroughs
To begin, I’d like to first acknowledge that my field, information systems, is one of the fastest-evolving academic disciplines, constantly adapting to the rapid pace of technological advancement.
A timely example is the recent surge of interest in artificial intelligence (AI), which has dominated academia for the past few years as of October 2024. Since AI’s inception in the 1950s, its potential has seen ups and downs, along with each major technological breakthrough—such as the development of neural networks (1950s-1980s), deep learning (2000s-2010s), and more recently, generative AI (mid 2010-2020s)—reviving interest and driving new waves of innovation.
A computer scientist's book on machines that think, published in 1949
Similarly, let's draw the timeline for blockchain technology, distributed ledger systems. The foundational technology, comparable to the neural network breakthrough in AI, emerged in 2009 with the introduction of Bitcoin by Satoshi Nakamoto. Since then, there has been constant buzz around the death and resurrection of blockchain, with one of the major breakthroughs being the Smart Contract, self-executing contracts with the terms written into code, introduced by Vitalik Buterin, a co-founder of Ethereum, in 2015.
Following this breakthrough, decentralized platforms emerged, spanning a wide range of applications, including non-fungible tokens (NFTs), decentralized finance (DeFi), and decentralized autonomous organizations (DAOs).
Q1. In this dark era for cryptocurrency, is learning about decentralized platforms still relevant?
Absolutely, yes! This answer applies to decentralized platforms in general, not limited to DAOs and NFTs. In a world dominated by centralized platforms like Google and Facebook, and with growing concerns over AI centralization, understanding decentralized alternatives is becoming increasingly important.
On this topic, studies like Digital Dystopia by Jean Tirole (American Economic Review, 2021), Decentralized Platforms by Gan, Tsoukalas, & Netessine (Management Science, 2023), and Decentralization through Tokenization by Sockin & Xiong (Journal of Finance, 2023) are some of my favorite readings (references provided at the end).
Q2. What is the value of understanding how DAOs operate?
DAOs provide organizational researchers with an initial playground for experimenting with decentralized governance, which was largely constrained by scalability and sustainability issues before the advent of Smart Contracts. Open-source communities offer an instructive example for such constraint, largely due to the lack of financial incentives to sustain long-term voluntary contributions.
Though often seen as a new type of organization, I prefer to describe DAOs as open-source communities enhanced with tokenization to solve the issue of lacking financial incentives, for those not familiar with decentralized platforms. However, given the pivotal role of financial incentives in organizational design, It’s still important to note that DAOs are recognized as more than just descendants of open-source communities (see Lumineau et al.’s Organization Science paper (2021) and Ellinger et al.’s DAO study in MIS Quarterly (2024)).
In addition to tokenization serving as the linchpin of decentralized governance, the automated execution of decisions via smart contracts further helps DAOs address the scalability challenges faced by traditional open-source communities. While token-weighted voting, the most common tokenization scheme, is far from perfect, the focus should be on refining the system rather than discarding it. Tokenization is the pipe line behind the decentralized decision-making, aligning the diverse incentives of stakeholders toward the common goal of platform growth, ensuring long-term viability.
Q3. But do we really need governance to be decentralized in the first place?
Good question! At the core of the prior discussion (Q1) on decentralized platforms, in comparison to their centralized counterparts, lies the issue of governance. In centralized platforms, decision-making authority and control are typically concentrated in a single entity or a small group of actors. In contrast, decentralized platforms distribute control across a wider network, making the data dominance seen in today’s tech giants far less likely.
It is clear that for any small group to kickstart growth, some level of central authority is necessary for efficiency. However, as the group grows, despite the efficiency of centralized decision-making, some may benefit more from bottom-up decision-making rather than a top-down approach. I’ll discuss two sectors where the best solutions often emerge from the grassroots: education and government.
In education, decentralized governance could empower faculty and students to have more influence over decision-making processes, such as curriculum design or resource allocation. A DAO-like system could, for example, allow some rooms for more collaborative input while maintaining some hierarchy to ensure decisions are aligned with institutional goals.
In government, decentralized governance could enhance transparency and promote more engaged public participation, particularly in local decision-making or resource distribution. This would allow communities to have a greater voice in the policies that directly impact them, fostering a balance between local and global governance.
To conclude, decentralized governance isn’t just a niche concept for blockchain enthusiasts. The foundational principles behind DAOs are versatile and far-reaching. Very often, we DO NOT realize what we need until it’s introduced—much like the iPhone taught us some time ago.
Shifting the discussion to NFTs, I'll keep my focus limited on Art NFTs only since I am not well aware of the other industries in NFT market, such as metaverse and gaming.
Q. Hasn't the NFT market collapsed?
Yes, the NFT market cap has