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Previous Thought papers have looked at how cryptocurrency and blockchain technology could be used for social good. These have primarily focused on donations; looking at the potential for "radical transparency" and the possibility of developing "philanthropic contracts" which could harness the power of data to automate giving. This paper will delve into another aspect of the work of civil society organizations (CSO's) where the blockchain could have a major impact: regulation.
The blockchain is currently best known as the mechanism at the heart of Bitcoin and other cryptocurrencies, where it acts as a public record of ownership and transactions between currency users, but it has the potential for far broader applications. Some of the key features of the technology which are relevant to these wider applications are:
- Transparency and openness
- Reducing transaction costs
- Increasing trust
- Integrating the digital and physical world
Given that the role of the regulator has potentially been reduced to approving the adoption of certain smart contracts foverning the operation of a system of charities that is essentially self-sustaining and based on consensus would it be enough to ensure that the judicial systen had sufficient oversight to prevent the adoption of any rules that were in direct contravention of charity law and leave it at that?
The technology seems as though it is here to stay and is likely to play an ever-increasing role in many facets of our lives. Furthermore, many of the issues and ideas it throws up are ones that are likely to be present in the future regardless of the specific technology being used. Hence now is the time to start thinking about what they might mean for charities and not-for-profit organizations and the people who support them.
We have to assume that in order to make a system of governance-by-algorithm for CSO's feasible there would be systems in place to allow appeals; and that the smart contracts representing the regulatory rules could be modified when required. The obvious drawback is that fundamentally shifts the balance of responsibility from the regulator to the CSO: now, instead of a charity having to justify themselves in hte event that they are accused of breaching the rules, they would have to argue for the rules to be changed or for them to be granted an exemption prior to the fact.