All You Need To Know About Public Blockchain Governance

All You Need To Know About Public Blockchain Governance

Presents permissioned public blockchain governance to international organizations LACChain regulates blockchain so that it can be used by any type of user. 

It has proposed to international organizations governance regulations to make a blockchain network for universal use . LACChain ( global alliance to promote blockchain in LATAM ) has chosen the permissioned public blockchain model because it complies with the legality of the countries where it is used. 

Now it has developed “a governance to regulate the response against possible failures of the blockchain network, and allow its harmonious evolution”, Reports Albi Rodríguez Jaramillo, senior advisor at the IDB LAB (the laboratory of the Inter-American Development Bank).

The governance proposed by LACChain supports an active blockchain 24 × 7 for any type of use, and that evolves with future demands. One of the brakes for traditional companies to use this technology is knowing who responds if the network goes down, or is hacked.

LACChain’s proposal includes that a Neutral Orchestrator Entity will create the rules of the game to guarantee the sustainability of the public blockchain allowed.

The idea came from Moisés Menéndez, senior advisor at BID LAB. “The entity must orchestrate the fulfillment of the complete blockchain cycle. The important thing is that the user of the network knows the mechanisms of the ecosystem to anticipate possible conflicts of interest, and that they respond to eventualities or failures . 

It is the so-called governance, and it must be done before developing the blockchain network”, the components and users of a blockchain“ to have aligned values ​​and a vision of the final objective. This coordination will increase the sustainability of the blockchain ”.

Sustainability

Governance is essential in any type of public blockchain. A blockchain network can be public, public permissioned or private (of a company with its suppliers or of a group of companies). In either type, the accent of decentralization, scalability, or legal value can dominate.

 “It is important to have the objectives of the construction of the blockchain clear. Then it’s time to define the relationships, and align the incentives (economic, social or reputational). These principles must be included in the governance that governs the blockchain ”.

The sustainability criteria must prevail over the profitability criteria. A public blockchain to build services cannot be expensive, nor have volatile prices because its cryptocurrency is taken as a speculative investment. A blockchain can serve NGOs, traditional banks or listed companies if it complies with the regulations according to them. “ Governance is as important in public blockchains as in private ones ”.

Immutability

The nature of blockchain technology removes the responsible provider from the network. “Governance defines the operating structure of the network. The responsibility of the parties that make it possible, and the relationships between them.

 It regulates the relationships of those who use it, and the levels of service and responsibility. It must have an incentive regime for the nodes, and penalties for non-compliance with the maintenance of the service. Governance analysis is absolutely essential before using a network to avoid taking risks. 

Immutability ensures the impossibility of changing the information stored in a blockchain because the owners of the nodes cannot agree to do so. It is the basis of the blockchain philosophy, and it disappears if a company has the majority of nodes. 

Or if the owners of most nodes can agree to covert changes. “ Blockchain only fulfills the function of immutability if the governance is solid. Governance must design the immutability of a private consortium blockchain. Or that of a blockchain of a company with its suppliers.

These pre-established rules suppose a contractual framework that can be explicit (contract signed when adhering to the blockchain) or be written in the general conditions to which you adhere . 

The Public Ones

Without governance there is no blockchain. It is a matter of vital importance . Bitcoin and the first cryptocurrencies were born with minimal rules. Governance has been written in the repository of public blockchains where open source is developed in a collaborative way, and it is developed in a participatory way. 

Disagreements between bitcoin miners (computers that keep the blockchain running) have led to partitions of this network. The formation of a pull of mining farms (facilities with thousands of computers to mine) to make decisions has received accusations of centralization.

The Ethereum community and its creator, discuss on public sites such as Medium or Twitter, the changes to the governance of the blockchain. The latest changes seek to make a more scalable and cheaper network, given that some users have abandoned Ethereum due to the rise in price of their cryptocurrency.

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