When it comes to permissioned networks, governance becomes much less challenging as the method used to grant permissions to participants is an essential part of the network’s governance structure. These networks have strict onboarding controls, and due to their closed-loop nature, it’s highly unlikely for a malicious participant to bypass all the necessary measures and gain access to the network.
In contrast to open networks like Linux, where governance can be a significant challenge, permissioned networks have a built-in mechanism to regulate access and ensure the integrity of the network. This makes them an attractive option for businesses and organizations that require secure and reliable network infrastructures. By implementing strict governance protocols and permissioning controls, permissioned networks can maintain a high level of security and protect against potential threats.
Because of their open accessibility to anyone with an internet connection, public and permissionless networks are more susceptible to attacks. Currently, public networks hold approximately $40 billion worth of assets, and the total cryptocurrency market cap is around $800 billion. As the industry continues to expand, these figures are expected to rise to tens or even hundreds of trillions of dollars. To meet the demands of large institutions and financial regulators, it will be critical to establish a governance framework that is acceptable and trustworthy for public blockchain networks.
The governance methods employed by early internet pioneers like the Internet Engineering Taskforce (IETF) have greatly influenced the Ethereum network and other public networks. The IETF’s approach to governing working groups involved rough consensus and running code, which has played a significant role in the development of public blockchain protocols and standards.
Under this approach, there are no fixed criteria that must be satisfied to consent or endorse new standards or protocol modifications. Instead, members engage in open discussions, and practicality usually wins out, given that there is enough support within the groups or community and no apparent objections to proposals. The idea of running code has been extremely useful here since merely debating the details of protocols isn’t sufficient; having something that can be rapidly implemented and demonstrated to be functional strengthens the process.
The governance approach used by early internet pioneers has not only influenced the development of public blockchain protocols and standards but also the open-source movement. In open-source projects, contributors enhance projects by contributing code that fixes and improves them. When considering long-term governance approaches for public blockchain networks, it is essential to examine how open-source software has evolved to power some of the world’s largest businesses. It is likely that Ethereum and other networks will follow a similar model.
It was always the belief that the Ethereum community has similarities with the Linux community during the late 90s and early 00s. It is intriguing to observe how Linux progressed to become arguably the most significant open-source software in the world. Although operating systems and blockchains are different, Linux and Ethereum share the commonality of redefining technology landscapes. This was mainly due to the enthusiastic communities behind them.
In the early days of Linux, companies may have had concerns about the security and reliability of adopting an open-source Unix operating system that could be contributed to by anyone. Instead, they opted to pay for proprietary Unix platforms from established companies like Sun Microsystems, HP, or IBM that provided support contracts and assurance. However, the power of the free software movement proved to be a formidable opponent, and it not only disrupted the market for licensed operating systems but also for productivity tools, databases, web servers, and programming languages. As Marc Andresson famously stated, “It ate the world,” signifying the widespread adoption of free software.
While public blockchain networks differ from open-source projects as they are live networks, their increasing importance in our daily lives will lead to more contributions from companies. Currently, most contributions come from web3 companies like ConsenSys and the teams responsible for client node software. However, as banks, exchanges, and infrastructure providers increasingly rely on these networks, they will likely invest more heavily in their development.
Similar to the evolution of Linux over the past 30 years, it’s likely that corporations will become significant contributors to Ethereum and other public blockchain networks in the coming years. As more businesses rely on these networks, they will inevitably start investing more in their development. In the 2040s, or even sooner, we may see a similar dominance by corporates in the blockchain space. However, this future isn’t so different from what we have now, given that core internet services such as the Domain Name System already rely on decentralised public internet services. While the Domain Name System doesn’t use blockchain technology, it does operate on open-source software that is publicly available and runs on the internet.
The governance of blockchain networks still requires some level of regulation. For example, even if banks transact in a secure manner that involves public networks, they will require regulatory approval. Although this will take time to establish, it is an inevitable step towards the mainstream adoption of blockchain technology. If we want to envision the potential future of public blockchain governance, we can draw insights from the journey of Linux.