Programmable incentivization and its implications for self governance
govern: to exercise continuous sovereign authority over (Merriam Webster 2019)
sovereign: one that exercises supreme authority within a limited sphere (Merriam Webster 2019)
self-governance: government under the control and direction of the inhabitants of a political unit rather than by an outside authority (Merriam Webster 2019)
Self-sovereign identities put the user in control of their data and financial assets. If governing can be thought of decision-making regarding the aggregation and allocation of resources, how could self-sovereign identities and smart contracts offer new opportunities for self governance? Opt-in mechanisms of incentivization based on the conditional provision or restriction of access to financial or informational assets could provide individuals with an enforceable mechanism of self-regulation, to encourage intentional behavior. As long as individuals are interacting with the cyber domain using their self-sovereign identity, such mechanisms could apply globally, regardless of the person’s physical location.
As the world globalizes, long-held understandings about the nature and role of government and the individual are being challenged. The concept of governance has been expanding to include the processes of decision-making of private and third sector actors, regional and international governments and non-governmental organizations, and even individuals, working in coordination in hierarchical, market- and network-based organizational structures.
Increasingly, our traditional systems of government and governance seem to be showing their limits in their ability to respond to the demands of this dynamic and evolving period of human activity. As the limits of traditional governance become apparent, new and more nuanced mechanisms are emerging, creating an opportunity for a more capable form of governance. Notable amongst these are public blockchains, which allow users to store and transfer financial and informational assets, and deploy and execute software — without requiring permission or intervention from any single authority.
To govern is to make decisions, to aggregate and allocation resources in accordance with the needs of the governed. Mechanisms of governance often use the granting and revocation of access to resources — goods, services, information or access — to incentivize the subjects governed to behave in accordance with the laws, rules and norms deemed right and just by those establishing the system of governance.
The limits of space-based governance
Government is often thought of as having a geographic boundary, within which (presumably physical) entities are within their jurisdiction and subject to their laws. A hierarchy of levels of government enable the system to tailor policy and process to the most suitable scale: lower levels allow for more nuanced, localized rules, while higher levels reap the benefits of economies of scale and centralized coordination. The key distinguishing feature of these Type 1 governance structures is the topological non-intersection of government jurisdictions across a single level of the hierarchy. Put another way, a physical object cannot be in two Type 1 jurisdictions at once (short of straddling the border).
Hooghe and Marks identified another form of governance structure in competing, “overlapping, special-purpose local jurisdictions” such as transit or waste management authorities. These structures, oriented “around particular policy problems” (rather than “around particular communities”, as in Type 1 general-purpose governments), have more limited jurisdictional scope, and often denizens can choose amongst several service providers.
Of course, we live on one world. Boundaries are conceptual divisions of space — very useful for delimiting responsibility, but often arbitrary, and sometimes inappropriate ways of distinguishing between people and things. In the 21st century, information technologies have advanced to the point that a fundamental truth is no longer possible to ignore. A global and ubiquitous conceptual space exists, shared in our individual awarenesses. In any mind, “4” has the same meaning. Equally, anywhere,
var x = 4; has the same significance, if executed in spaces governed by the same rules. The Internet, which enables effectively instantaneous transfer of information anywhere in the world, is a new domain, requiring governance just like the physical one. This essay explores the potential of self-governance within the informational domain — a domain that is global in scope and bound by the laws of logic.
By this definition, each individual person engages in self-governance in some form. Ultimately we are all governing ourselves — we control (consciously or less so) the actions of our minds and our bodies within our individual awarenesses. We each make decisions about the physical and conceptual resources under our control and decide the boundaries of acceptable behavior, as well as consequences for crossing those boundaries. This is most often highly informal, an internal process of making resolutions, commitments and intentions to ourselves and others we trust — partners, friends, family, colleagues. Our personal codes of behavior are informed by the law and fear of consequences enforced by the state. This said, sometimes individual behavior strays beyond the law’s bounds, and personal strictures more stringent than what is legal are self-imposed due to some perceived moral, personal or social duty.
We set these goals and boundaries because we believe achieving or adhering to them will improve our chances of achieving or acquiring something we want, whether it is a material thing, recognition from another, good health, a sense of virtue and so on. In other words, we each pursue our goals and ideals through personal self-governance. We exercise sovereign authority over ourselves, and choose to act within the boundaries of the law of whatever land our bodies happen to be in, usually because we understand the negative consequences of overstepping those lines.
It is at this level — the private, individual level — that blockchains may offer an opportunity to formalize those personal processes of governance into a personal structure of government. Self-sovereign identities put the user in control of their informational resources — personal data and financial assets.
This is done through the use of asymmetric key cryptography. Consensus protocols used by the Bitcoin and Ethereum networks require account holders to present a digital signature whenever they want to transfer funds or execute smart contracts. This signature — which is, ultimately, a number — can only be created, or computed, with a private key, which is another number, or piece of information. In systems where individuals can have sole custody of the information required for them to authenticate themselves and take action, they are self-sovereign.
Private keys are required to prove identity: they are the identifying attribute of an individual. By decentralizing the responsibility of holding private keys to self-sovereign users, and by locking informational and financial value into a database that is sufficiently decentralized, these public consensus networks have revoked control and power from centralized institutions, which have leveraged their role as trusted holders of information in exploitative ways. This subtle, fundamental shift in the way money works is the greatest opportunity for a re-imagination of the mechanisms of governance — timed just as we face a suite of existential threats that demand such a radical rethink.
Deep technical, economic, legal and — above all — ethical questions concerning such a system and its configuration deserve thoughtful consideration. A few examples may help to illustrate the idea, built on conceptions of various levels of web3 adoption in our information and communications technology systems.
The first and most obvious use of programmable incentivization mechanisms to guide individual behavior is the control of funds. Suppose Alice has reflected and decides she wants to prioritize her physical health and well-being. She’s tried to do so in the past, but found making a habitual lifestyle change difficult.
Alice could create a payable smart contract that, upon reception of funds, diverts a portion of the income to a contract address that Alice controls. If the gyms and exercise studios she frequented accepted payment within such a system, this contract could have a fixed list of approved addresses where contract funds could be sent. With this, Alice has to spend that money at gyms — transactions sending money to any other address would be rejected and an exception thrown.
Extending this — reliant on even deeper conversion of our systemic value chains to integrate with web3 technologies — suppose Alice wants to improve discipline about her diet in this holistic effort toward her ideal lifestyle of health and fitness. Within the contract instance holding Alice’s funds, she could enforce a mechanism preventing her from purchasing certain classes of food or drink items — say, ice cream and potato chips. This of course depends on the grocery store providing that information to the contract when a transaction is generated and signed (or perhaps when the item is scanned), but if this were possible, Alice could make it impossible for her to break rules she might be less inclined to follow on impulse at the store.
A final example relies on another, perhaps more difficult, system integrating with web3 technologies to enable programmable self governance: the browsers or operating systems running on the self sovereign person’s devices. Informational resources have value; granting or revoking access could incentivize behavior. Suppose Alice accesses her online streaming services and social networking sites by logging in with her self sovereign identity. By placing a smart contract layer she controls in the authentication process, Alice could enforce another rule — say, that she cannot stream a film while she is scheduled to exercise, or at all, until evidence of that day’s exercise has been reported to a smart contract from her smart fitness device.
While these are small examples, these ideas illustrate the potential for enable self sovereign individuals to shape their own behavior by programming their own incentives. They also raise questions about the ethics and risks of such a system.
On an international level
Such nuanced, programmable incentivization mechanisms could be applied on a much different scale to Alice at the local store. As a species, we face existential threats to our existence. The climate is nearing a tipping point. Autonomous weapons are rapidly developing. AI and machine learning are evolving. These are highly complex systems, and it is impossible to predict their future dynamics and capabilities.
Smart contracts programmed to incentivize pro-social and pro-environmental behaviors by individual humans, households, firms, governments and states could be a powerful tool in addressing these existential threats. Spatial finance holds great promise to upend centuries of entrenched, unsustainable capitalist behaviors by making pro-environmental firm behavior the most profitable course of action. For example, by tying corporate sustainability rankings or even cash transfers to each firm’s action and evidence of results — asset-level measurements of emissions captured by satellites or other remote sensors— private sector decision-makers would have tangible, defensible reasons for reducing CO2 emissions. Or, commercial vessels could be tracked using IoT devices and satellites. If they are detected entering marine protected areas, or calling on a sanctioned country’s port, or engaging in unauthorized transhipment at sea, instant action could be taken. Insurance rates could spike — or insurance coverage could be revoked. Audits of the companies operating the ships could be triggered. Authorities at destination ports could be alerted. Illicit activity could be made so much more difficult. Never eradicated — but a 90% reduction in human and arms trafficking is absolutely a worthy outcome.
We could even collectively incentivize ourselves. We could set environmental targets — again, at any level, as any individual actor can be self-sovereign, whether they are human, machine, or organization — and pay our future selves for achieving our goals. For improving a city’s air quality. For driving and flying less. For stopping deforestation. For keeping people healthy.
A new conception of global governance
As self-sovereign identities emerge, the opportunity they present to improve how we govern ourselves should be thoughtfully considered.
Furthermore, similar smart contract mechanisms developed by could offer individuals the choice of attaching their self-sovereign identity to an authority such as a government, company, university, etc. By ‘subscribing’ to an organizational membership — or even a country’s citizenship — the informational actions of the self sovereign individual could be subjected to the conditions (i.e. behavior governed by the rules) as defined by that organization or authority. Taxes could automatically be deducted from every transaction (regardless of geographic location); religious dietary restrictions could be enforced at the point of sale; individuals could avoid purchasing products from companies with unsustainable supply chains with decision-making automated. Of course, constraints on freedom are difficult to justify if some benefit is not conferred: the benefits of membership or citizenship. Adherence to these membership or citizenship contracts could be how valid membership is proven and rights are conferred upon the members.
Blockchains, smart contracts and the self-sovereign identities emerging within the web3 paradigm may be enabling a new type of governance, global in scope.
 Bevir, Mark. 2012. Governance, A very short introduction. Oxford University Press.
 Hooghe, Liesbet and Marks, Gary. 2003. Unraveling the Central State, but How? Types of Multi-level Governance. American Political Science Review.