Blog 3 - Blockchains, Ostrom and the end of the tragedy of the commons
Two relatively recent developments challenge the wisdom that "the tragedy of the commons" requires our institutions to provide trust in the transactions between two parties and they have the potential to drive mass human abundance at the same level as have corporations and stock markets over the last 200 years.
In 2009, Ostrom won the Nobel Prize in economics for demonstrating that the tragedy of the commons does not need to occur if eight principles were present in the design of the governance of a shared resource (Ostrom, 1990), (Cox, Arnold & Villamayor Tomás, 2010).
In 2008 Satoshi Nakamoto invented the cryptocurrency bitcoin and its primary innovation, blockchain technology (Nakamoto, 2008). Blockchain allows cooperative production whilst economically incentivizing participants to enforce scalable decentralized governance. Blockchains require no central source of trust as rules are embedded in smart contracts that are cryptographically and economically secured (Davidson, De Filippi & Potts, 2017). Simply blockchains can be used to trustelssly automated and scale Ostroms principles.
The next blog will further investigate Ostoms rules..