Redefining Money: Tagion’s Vision for Fairness, Empowerment and Community Governance
Money plays a leading role in our lives. It shapes our actions, ambitions and aspirations. We work hard to earn it and eagerly seek opportunities to make it grow. But have you wondered about the bigger picture of money?
Money extends beyond personal wealth. It’s a resource that profoundly affects the global community. And understanding its value and impact can help us make better choices about how we use it.
Today, money is not limited to physical currencies. With the emergence of distributed ledger technology (DLT) giving rise to cryptocurrencies, money has become more complex and versatile than ever before.
This blog post will explore the concept of money based on Nobel Price Winner Elinor Ostrom’s principles of governing resources and introduce how Tagion applies these in practice.
Effective resource management
Inclusive and participatory processes with clear and practical rules are vital to managing common good resources effectively. Elinor Ostrom’s principles for common good resource management highlight the importance of collective action, local autonomy and diversity (Ostrom, 1990).
Money systems should enable decision-making power and self-governance locally because local communities operating on the “front line” have context-specific knowledge, allowing for more accurate decisions and predictions. Adapting to changing circumstances and supporting sustainable use of resources requires diverse and flexible institutions.
These three key principles of effective resource management offer valuable insights into managing money as a shared resource.
Let’s consider each principle in the context of effective money resource management and how today’s financial system mismanages these resources.
Collaboration requires mutual understanding to establish regulations, monetary policies, and economic frameworks that promote stability, fairness, and transparency. Considering the perspectives of individuals, communities, financial institutions, and governments is essential for collaboration to be effective.
Today, money and resource management frameworks need more inclusive and participatory processes proposed by Ostrom. Decision-making is concentrated in the hands of a few players. Central banks, regulatory bodies and large financial institutions set monetary policies that affect everyone.
This centralisation limits the representation of diverse perspectives and diminishes the potential for collective action. The needs of individuals and communities, who interact with money daily, are often overlooked. For example, policies that benefit large corporations or wealthy individuals while neglecting the needs of low-income communities can increase inequalities.
Empowering local communities and individuals to control financial transactions promotes local decision-making power and self-governance. Money systems can foster economic empowerment and reduce inequalities by promoting financial literacy, access to banking services, and versatile financial tools.
Today, centralised authorities impose control over monetary policies and apply a “one-size-fits-all” approach to economic decision-making. The financial system may not fully reflect the diverse needs, aspirations and challenges of different regions and populations.
For example, rural communities may have limited access to banking services as a result of particular environmental factors. Cooperative models, community-driven initiatives and context specific policies require specific dynamics for effective resource management.
A resilient and inclusive monetary system can adapt to continuous change and cater to different needs and contexts. Institutions should encourage innovation, competition and the development of alternative financial models, not inhibit them.
Today, there is a limited number of financial frameworks. Over time, certain institutions have gained prominence. Established power dynamics, a self-reinforcing cycle of network effects and a high regulatory barrier to entry have solidified current institutions in their dominant position.
The rise of Distributed Ledger Tech (DLTs)
The rise of DLTs challenges the traditional financial landscape and introduces new possibilities for effective resource management. DLTs are decentralised systems that enable secure and transparent recording of transactions across multiple participants or nodes. In the context of building a fair and equitable monetary system, DLTs play a pivotal role.
Unlike centralised monetary systems, which rely on a central authority to validate transactions, DLTs allow for peer-to-peer interactions and decision-making based on consensus. This ensures no single entity has complete control. In line with Ostrom’s principles, this decentralisation promotes fairness, transparency and inclusivity.
Understanding Tagion’s approach
Elinor Ostrom emphasises the importance of shared resources and equitable decision-making to benefit the many rather than the few. Tagion’s design puts these principles into action.
Its community governance structure, Proof-of-Community, prioritises transparency and active participation. Its unique technology stack includes a distributed database, DART, built into the network and hash graph consensus, enabling an environment for a scalable, secure and decentralised network to flourish.
Empowering community ownership and governance
Community members drive and shape usable resources’ development, operation, maintenance, decision-making, and governance. These resources include source code and binaries, concepts, governance rules and the actual running of the network.
The Proof-of-Community governance model allows Tagion users to create, maintain and develop incentives and rules relevant to their local environment or use case. Everyone has an equal right to join the community.
Once someone becomes part of the community, reputation and voting power have to be earned. They cannot be bought or mined. Through action, reciprocity and respect, each community member builds their reputation score to shape the network continuously.
With time and active participation, Tagion evolves into a Commons with a self-sustainable revenue model where all community benefits. Ownership and governance become shared resources as users pay for utilising the system and are paid for their work.
Those with deep knowledge of the environment are rewarded for their action and granted a more weighted reputation to act on. Local autonomy is enhanced — a core principle for fair common good resource management.
Hashgraph consensus — a blockchain alternative
Hashgraph-based consensus is the underlying technology that enables decentralised decision-making in the Tagion network. Hashgraph ensures consensus among nodes by providing a mathematically proven, finite solution to the Byzantine generals’ problem.
Unlike classical blockchain-based systems, Hashgraph guarantees a secure and reliable network with no uncertain order or probabilistic solutions. Guaranteed tamper-proof ordering with full security is an essential building block enabling collaborative action. No one can undercut or front-run anyone else when carrying out transactions.
To ensure a permissionless system with a reduced risk of Sybil attacks, Tagion introduces a unique Node Swapping mechanism where nodes will be randomly swapped in and out. With weights based on their reputational score and their score as a node operator, nodes will be swapped in. New nodes must earn sufficient scores to qualify for swapping.
A customisable distributed database
The DART enables local autonomy at scale thanks to sub-DARTS. These sub-ecosystems enable individuals and communities to host environments with their own governance rules and applications. Each sub-DART has its own rules written in its database, and the user configures and decides these rules.
Referring back to Elinor Ostrom’s principles of effective common good resource management, the DART is a crucial component enabling collective action, local autonomy and diversity directly on the network.
DART reduces the risk of a single point of failure and data manipulation by distributing data across multiple nodes and sharding it within sectors.
Tagion is pioneering money as a Commons as a future-proof DLT-based monetary system.
Tagion, with unique DLT features and community governance, promotes fairness, transparency and inclusivity. Money as a Commons requires collective action, local autonomy and diversity.
Building this is no small task. Jump on Discord and say hi. Let’s build the future.
Ostrom, E. (1990). Governing the Commons: The Evolution of Institutions for collective action. Cambridge university press. Chicago