The weakest link of a chain is what determines how strong a chain is. Thus, when it comes to blockchain the weakest link can be attributed to its founders. It is fairly easy to link nodes together than it is to ensure people agree on the technology. The biggest obstacle that blockchains are encountering lies in governance.
Through blockchains as well as smart contracts, companies are facing a different set of problems compared to what they encountered initially. The new technology has come to disrupt the way both private and public firms operated their businesses. For one, it has helped reduce transaction costs by a significant rate. It has created a safe and secure mode of transacting.
Initially, governance was not a concern
On the onset of Bitcoin, governance of the on-chain technology was not a priority then. The focus was on developing a new technology. It opened the opportunity for the creation of more blockchains. This has led to the need for governance in the sector.
Being the first to introduce the blockchain governance concept, Dash introduced the usage of master nodes. This allows operators to vote on budget proposals. It provides a way for the investors to reach an agreement among members of its community. Other crypto projects have since copied this model.
In a bid to overcome problems associated with human structures, some blockchain firms have since come up with different innovations. These firms believe that token holders can reach a consensus by creating an efficient method. This will ensure quick decision making that will not affect the decentralized nature that makes blockchains so attractive.
Tezos which was launched last year focused on governance as its main selling point. It stated that’s its protocol would offer a “formal process through which stakeholders can effectively govern the protocol and implement future innovations”. Unfortunately, this was not enough to prevent a fallout between its foundation members. This is a clear indication on how difficult it is for humans to reach consensus.
Storecoin is a blockchain that focuses on the human aspect as opposed to a technical one. It charges zero fees. Its governance is based on the U.S constitution concentrating on change consensus. It checks and balances its different branches on the level of protocol, monetary policy decisions, and key people.
For blockchains to prosper, they need to adopt an enterprise type of governance. The model should enable decisions to be arrived at through a democratic process. it should be enforceable and trustworthy.
However, a specific governance model cannot work for all blockchains. Different firms will have to adopt different structures, checks, and balances, as well as arbitration processes.