How Could Grassroots Cryptocurrencies Support a Grassroots Digital Economy? Ehud Shapiro | a16z crypto

TL;DR

Grassroots cryptocurrencies could provide a foundation for a more egalitarian digital economy through autonomous deployments that interoperate when connected. Ehud Shapiro contrasts this architecture with centralized platforms such as Facebook, YouTube, WeChat, Airbnb, and Amazon Marketplace, as well as stake- or wealth-based cryptocurrency systems. The proposed currency layer uses dissemination and equivocation exclusion without requiring full consensus. Read on to understand the architecture and its goals.

Transcript

uh okay welcome everyone to today's a16z crypto research seminar very pleased to welcome back Udi Shapiro a professor at Weitzman uh yesterday he told me something about himself which I didn't know but was not very surprised to hear which is that every project he's taken since he was in high school he was immediately told was far too ambitious uh s... Read More

Key Insights

• ⚾ Grassroots cryptocurrencies aim to establish a decentralized digital economy based on mutual trust and liquidity.
• 🤨 The issuance and trading of IOUs form the foundation of grassroots cryptocurrencies.
• 🫥 Mutual credit lines and redemption ensure the integrity and accountability of grassroots cryptocurrencies.
• ⚾ Local currencies and community-based economies can be fostered through grassroots cryptocurrencies.
• 🏛️ Grassroots cryptocurrencies provide mechanisms for civil resilience and trust-building within communities.
• 🫥 Companies can issue their own grassroots coins through mutual credit lines with employees, customers, and suppliers.
• 💄 Governance within grassroots cryptocurrencies occurs off-chain and may involve democratic decision-making processes.

Questions & Answers

Q: What is the main goal of grassroots cryptocurrencies?

The goal is to provide a foundation for a grassroots digital economy and, ultimately, a more egalitarian digital society. The research seeks egalitarian alternatives to global digital platforms whose control is currently concentrated or distributed according to wealth.

Q: What makes a distributed system “grassroots”?

A distributed system is grassroots when it supports autonomous, independently deployed instances in different places and at different times. Those deployments must be able to interoperate once they become interconnected.

Q: How do grassroots cryptocurrencies differ from platforms such as Facebook and YouTube?

Shapiro describes Facebook, YouTube, WeChat, Airbnb, and Amazon Marketplace as client-server or cloud-based systems controlled by one person or a small group. Grassroots systems instead begin as autonomous, independent deployments that can later interoperate.

Q: Why does Shapiro describe Bitcoin and Ethereum as plutocracies?

He uses “plutocracy” as an objective description of systems where control is divided according to stake, currency, or wealth. In proof of work, wealth affects how much computing and energy infrastructure can be operated, while Ethereum’s proof of stake links participation more directly to how much Ethereum a participant owns.

Q: Do grassroots cryptocurrencies require a full consensus protocol?

No. In the architecture presented, grassroots cryptocurrencies sit on dissemination and equivocation-exclusion layers rather than on top of full consensus. Full consensus additionally requires ordering.

Q: Which protocol layers support grassroots cryptocurrencies?

Grassroots cryptocurrencies are placed above grassroots dissemination and equivocation exclusion in the proposed protocol stack. These layers provide the foundation for the payment-oriented application without requiring the ordering layer used for consensus.

Q: Why separate dissemination, equivocation exclusion, and ordering into different layers?

Different applications need different combinations of capabilities. Social networking can operate with dissemination alone, while a payment system can use dissemination and equivocation exclusion; ordering is added when full consensus is required.

Q: What broader research vision led to grassroots cryptocurrencies?

The project grew from roughly seven years of research at the Weizmann Institute involving Shapiro’s research group, postdocs, PhD students, and international colleagues. Its long-term vision is an egalitarian digital society supported by a new architecture for the digital realm.

Summary & Key Takeaways

• Grassroots cryptocurrencies seek to challenge the centralized power structures of traditional digital platforms, aiming to create a more egalitarian digital society.

• Grassroots systems are characterized by being autonomous and independently deployed, with the ability to interoperate.

• Grassroots cryptocurrencies are IOUs that can be issued and traded by individuals, corporations, banks, or other entities.