Governance in the Blockchain Economy
Darwin’s theory of survival of the fittest works not just for living beings but also blockchain networks. Only those networks that can effectively adapt to their environment and changes in the environment will be the ones that not only survive, but thrive. A blockchain network needs to evolve in response to ongoing advances in technological solutions. This is where blockchain governance plays a crucial role.
Blockchain governance is about the processes that stakeholders in the ecosystem use to make decisions. So, the decision-making process itself and the way stakeholders coordinate for decisions comprises governance. In other words, the creation, maintenance and revoking of decisions as legitimate, the norms that surround such processes and other means for the coordination of stakeholders, falls under the purview of governance.
Given that it is essentially associated with the stakeholders in the blockchain ecosystem, it is also about the interests of the stakeholder and their goals for the network. Of course, they would want the network to work in their favor but for the network to survive, it has to overcome their differences, which can be achieved through effective governance.
Blockchain Governance Solutions
A key issue that governance needs to address is how collaborative innovation can be sustained between independent projects on the same network. This would require effective division of the right to control decisions among the core stakeholders. In addition, blockchain environments often require multiple independent layers to work in tandem to deliver optimal functionality to the end user. This means that these layers need to function in cooperation. At the same time, decentralization needs to be maintained.
One way to achieve all the above is to hand over ownership rights to the end users. However, user-owned platforms tend to need the participation of a third party, much more than investor-owned platforms do. This not only defeats the purpose of using blockchain technology, it might also prove to be a hurdle in garnering initial investment.
In recent times, this issue of governance has been the focus of innovation, with various teams of developers working to create tighter layers of functionality that can interact with each other to ensure a satisfying experience for the end user. While this open source effort continues, blockchain governance might find a solution in a trusted execution environment (TEE). TEE can help data management across a decentralized system, where permissioned access to data is ensured through smart contracts. Here, multiple parties would be able to set and enforce rules to govern interactions, while also being able to track data access.
The Regulator Role in NEC Blockchain
Governance defines the procedures and rules that regulate every aspect of a blockchain ecosystem, from the process to gain membership to managing permission, verifying transactions and even protecting against cyber threats. To enforce all this, while allowing an independent, hands-off regulator to oversee the ecosystem, NEC employs trusted execution environments (TEE).
A trusted execution environment is a secure area in the main processor of a system that ensures that the data and code loaded in it are protected in terms of integrity and confidentiality. Being an isolated execution environment, TEE enhances security. Applications that run within TEEs are therefore inaccessible to unauthorized personnel and third parties.
The reliance on TEEs in the NEC Blockchain allows for data trails to be accessed and audited by independent regulators. Smart contracts specify the rules of interaction within the blockchain ecosystem, without the need for any centralized authority.
The NEC model not only allows for hands-off regulators, it also ensures secure, scalable and high speed transactions and asset transfers. In addition, with the use of satellite chains, not just multiple transactions but also multiple payment channels can be processed simultaneously. At the same time, the independent regulator can also track and monitor the entire system and even publish or enforce financial regulations in a flexible manner across all transactions.
(February 28, 2020)