On March 10, the "Blockchain Governance Initiative Network" [BGIN], a body for governance in the blockchain field, was formed [related article]. The parties use the term "international network", but here I use the term group for clarity.

For more details, see the related article above. Bitcoin developers and Ethereum developers are one of the founding members of "BGIN". Some people have contributed to the basic technology of the Internet.

Interestingly, the Financial Services Agency of Japan is backing this BGIN. Two members of the Financial Services Agency have joined the founding members of BGIN. The online panel meeting on March 10 was hosted by FSA's Secretary Toshihide Endo as host.

Recorded video of the online conference held simultaneously with the launch of BGIN
Original [English] https://vimeo.com/395639333
Japanese simultaneous interpretation https://vimeo.com/395638416

Behind such an unusual approach, there seems to be a perception that "the cryptocurrency and blockchain sectors need a different framework than the traditional financial regulations."

Dialogue with developers is important in cryptocurrencies without intermediaries

At the panel meeting, FSA Secretary Endo made the following statement: "Conventional regulations have always had an intermediary. We have regulated intermediaries, not players. In the new system [blockchain], players are directly connected. There are no intermediaries."

In such a decentralized scheme, the regulators must change their mindset.

Specifically, as part of a "multi-stakeholder process" where different parties talked, financial regulators participated, expressed their views and expressed their willingness to do things, sometimes in a style that contributed.

Such thinking is close to the field of Internet governance. Shinichiro Matsuo, a professor at BGIN, a research professor at Georgetown University in the United States, commented on past cases such as the Internet Society of the Internet, the Internet Engineering Task Force [IETF], and the Internet Corporation for Assigned Names and Numbers [ICANN] We have created an organization that performs similar activities. "

In a related statement, FSA Secretary Endo made the following statement at a panel meeting:

"[Cryptocurrencies] are decentralized and multilateral and there are no intermediaries, so we will learn lessons from the history of the Internet and fuel multi-stakeholder cooperation, especially with the technology community. It wasn't there, but it's going to be important. ''

In other words, he has stated that he wants to "talk" with the crypto / blockchain developer community as a financial regulator.

"I want to allow FSA officials to write Bitcoin source code."

Shinichiro Matsuo, one of the founding members of BGIN, said at the panel meeting:

"At each workshop, I asked [to the developers] the question," What happens if regulators create Bitcoin source code? "

"The FSA has a diverse workforce. I hope the FSA staff can write the source code for Bitcoin," said the FSA Secretary-General Endo at the panel meeting.

The FSA in Japan has begun to look at the "code" of the four categories of "law, market, norm, and code" that move people, as it were in Lawrence Lessig's book, "CODE."

There is a supplement here. At an online press conference prior to the panel meeting, we asked about the relationship between the idea of ​​working on the Code in a multi-stakeholder process and how it relates to Lessig's book. "The context is close. But 'CODE' is a controversial book and difficult to interpret. Also, Aaron Wright, one of the founding members of BGIN, a professor at Cardoso Law School, Yeshiva University, USA I also refer to my book, Blockchain and Law, which is a comprehensive idea and works in our context, "said Yuta Takanashi, Deputy Director, International Affairs Division, General Affairs Division, Financial Services Agency.

Although it is not the same as Lessig's theory, it is promoting multi-stakeholders with the cooperation of legal experts.

This brings me to one question. Is it exactly what you expect?

One factor in thinking about this is that the cryptocurrency developer community decides things in an open source fashion. Anyone who has the technical skills, communication skills, and familiarity with the community can contribute to the community. Another option would be to hire Bitcoin Core developers, for example, as at the Massachusetts Institute of Technology Digital Currency Initiative.

Originally, the cryptocurrency developer community was formed by people called cypherpunks. Cipher punks are people who dislike power and are interested in cryptography. But in the medium to long term, the cryptocurrency developer community may have to be aware of the question, "What happens if a regulatory party participates in the development?" This question rebounds to the person who issues it. The question is, "Are financial regulators really allocating resources for crypto / blockchain code?"

Multi-stakeholder processes and blockchain

In the area of ​​standardization of technology, the "Dejour standard", which is an international public organization that has representatives from various countries participating in meetings to establish standards, has long been an authority. However, areas such as UNIX, the Internet, and open source software did not adapt to this approach. Many of the technologies that support our information society today are created in a different framework from international standards bodies. In other words, loose agreements between stakeholders and "de facto standards" determined by market choices play a major role.

The people who promote the Internet do not belong to a single pyramid. Individuals belonging to universities, research institutes, private companies, etc. have been slowly working together. The structure is not so affected by differences between countries or competition between companies. Under such circumstances, the habit of consensus building among several organizations such as ICANN and IETF has been established.

So what about blockchain technology? The cryptocurrency or public blockchain technology we are currently looking at has little to do with standardization or consensus building by a wide range of people at the moment. The development of Bitcoin is primarily under deliberation within the Bitcoin Core developer community. Ethereum is similar. It's hardly ever heard that multiple blockchain technologies talk and work together.

At a press conference, we asked questions about this situation. One of the founding members of BGIN, Shigeya Suzuki of Keio University Graduate School [special professor of the Graduate School of Media and Governance] explained as follows. He gave me "There are many opinions about how large the standardization of the protocol will be. Blockchain is a monolithic structure, a" big chunk. " Networking is going to happen. The future blockchain software stack will have something in common. For example, a common base of identities will make it easier to use.

I've heard the argument that the stack structure of blockchain technology will be separated [related article]. As blockchain technology becomes more practical, it may evolve from a monolithic monolithic blockchain technology to a multi-layered technology such as the Internet Protocol. At that time, such a multi-stakeholder process should come into its own.

However, I have the idea that it may not go in that direction. Take, for example, the history of UNIX. There have been several attempts to create a common specification between different versions of UNIX. However, looking back on history, these attempts did not lend itself to commonality and modularization of UNIX-based operating systems. Rather, they settled on focusing resources on the implementation of Linux, open source software that was born as a UNIX clone.

The BGIN effort has just begun. The initiative offers a number of interesting issues in looking into the future of blockchain technology. Will multi-stakeholder regulation work? Can financial regulators and the developer community understand each other? Can the academic community and cypherpunks work together? Will multiple blockchain technologies begin to cooperate in modularization and componentization? Will blockchain technology become more layered and modular?

I would like to see the answer when the times are a little more advanced.


Shane is an economics and mathematics double major with a keen eye for the financial world. His understanding of the current economic model of different countries is enlightening and he aims to bring that impressive knowledge and experience into his writing. He is currently exploring writing about different genres within the entertainment, business and cryptocurrency sphere and aims to bring diversity in his writing.

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