Comparing the fundamental roles of Ethereum and a democratic country

Imagine Ethereum as a sovereign state — A nation state like the USA or England, and not a network state like the one envisioned by Balaji Srinivasan. How does this nation state run? Who does the job of a president or prime minister? Who performs the role of the police and legal courts? And who defends the land from threats like the military?

These questions are tricky to answer because Ethereum doesn’t function like any country we’ve seen before. Ethereum has a novel form of democratic governance and a free market economic system. But there are massive differences in how nation states and blockchain ecosystems operate. Now there are certain key roles that are common to both, but how they go about fulfilling these roles are entirely different. Let’s see the parallels that can be drawn between the running of a democracy and that of the Ethereum network.

“Founding Fathers and Legislators”: Vitalik & Co.

The Founding Fathers of Ethereum are its core devs, headed by Vitalik Buterin who incepted the idea of the Ethereum ‘nation’. He, along with the core devs, then converted the idea to a reality, and drafted the constitution — the fundamental rules according to which a country is to be governed.

The Ethereum protocol isn’t governed by laws written in the constitution, but by the code that makes up the foundation of the protocol. In Ethereum, laws are in the form of code and the core devs are the legislators. But they do not posses unilateral power to enforce laws.

The core devs propose actions like hard forking Ethereum after The DAO hack, and transitioning the consensus mechanism from Proof of Work to Proof of Stake (The Merge 🐼), but they have to be agreed upon by the majority of Ethereum’s varied users before they are implemented. A true democracy at work!

“Security”: Miners/Validators

A blockchain is made secure through its consensus protocol which, among other things, makes sure that the actions of bad actors aren’t added to the immutable blockchain. Under the Proof of Work consensus model, the miners are responsible for ensuring the veracity of transactions recorded on the Ethereum blockchain. Once the switch to Proof of Stake consensus is completed, it will be validators who take over this role.

Defence against an ‘invasion’ comes from the consensus mechanism (whether it be PoW or PoS) which prevents, or at least minimizes to the greatest possible extent, the risk of a 51% attack. In the case of PoW, an attacker would need to possess 51% of the miners’ collective computing capability, whereas in PoS, they would need to own 51% of the total staked ETH (which amounts to over $10B as of now!) — both of which are incredible unlikely to be achieved.

An issue can arise when the miners/validators can’t achieve consensus among themselves. This is a very rare case, but it happened when the DAO hack took place in 2016. The thief claimed that since the code made the theft possible, they didn’t do anything illegal. The miners, and users, who agreed with this rationalization were the ones who stayed on the original chain, now called Ethereum Classic, after the subsequent hard fork while everyone else moved to the Ethereum chain which was reverted to its pre-hack state.

“Executive”: None

A country’s executive branch is responsible for carrying out the laws made by the legislators. And the numerous agencies and ministries which form the executive branch are known to create an infuriating level of bureaucracy for their citizenry.

This bureaucratic nightmare is absent from Ethereum because there is no need to implement laws. Code is law, and once the code is added to the blockchain, we can consider the law to be implemented. Also, Ethereum is a permissionless blockchain, which means that anyone can participate in the network without authorization from a governing body.

“Judiciary”: None

In countries, the role of judiciary, which is in charge of upholding laws and constitutional principles, is performed by legal courts. In Ethereum, however, this branch of government is non-existent. For the most part, a judiciary is not really needed in the Ethereum ecosystem since code can handle the processes of legal trials and sentencing.

For example, if a validator is acting in bad faith, for example, there is no need to drag them in front of a judge and make a case for why they need to be punished. There is code in place to deal with such a situation, and it can recognize and penalize bad validators (through penalties and slashing) without any third, or even second, party’s involvement.

There are cases where this approach fails. In the instance of a theft, for example, the various protocols, bridges, etc in the Ethereum ecosystem can blacklist the the address which stole funds. But they can’t do anything to make the thief return the funds in the way that a country’s prosecutors can.

“Media”: Everyone

“Who watches the watchers?”

This is a question as to how those in power can be held to account. In a democracy, the media plays this essential role by keeping citizens well-informed. In Ethereum, though, traditional media is not needed because everything is available to the public. Journalism is crowd-sourced since reported facts can be confirmed independently and don’t require trusting sources with insider info. Being a public non-profit blockchain that is open-source, Ethereum doesn’t veil anything that happens within the ecosystem.

Furthermore, anyone can join the network as a node operator and see exactly what’s happening on the blockchain. So threats to the ecosystem are mitigated to a large extent by the vigilance of everyone participating in the network because they all have something to lose if Ethereum’s security were compromised. “Who watches the watchers?” you ask. For Ethereum, the answer is everyone!

There might be more parallels to be drawn between Ethereum and a democratic nation, but the analogies don’t hold up very well. For that matter, the ones mentioned above might not be entirely accurate either. If you feel that I’ve missed a key role or have made an error while making an analogy, let me know in the comments!