The adoption of blockchain technology beyond cryptocurrency – collectively known as Web 3 – offers a number of possible futures for campaigns and elections. And while it’s still early, it’s important to anticipate forthcoming transformations.
Blockchain technology – the use of cryptography to create a distributed ledger – was popularized by Bitcoin and other cryptocurrencies. Money as we know is fungible. The dollar in my pocket is the same as the dollar in yours. In the last couple of years, we’ve seen blockchain used to create non-fungible tokens – NFTs. The rise of NFTs has led to an explosion of new applications which are collectively known as Web 3.
About Web 3
Web 1.0 was the read-only internet. It was dominated by publishers and portals like AOL, Yahoo, and legacy media outlets. You were only a consumer.
Web 2.0 is about reading AND writing. Thanks to social media platforms, blogs, and comments sections, the consumer could now talk back. You have become a creator. But as the debates over privacy, moderation and censorship reveal, the interests of Big Tech are not aligned with the interests of the users, industries, and countries they serve.
The hope for Web 3 is that the internet will now have a decentralized ownership layer. You will read, write, and own. The platforms you use will compensate you for the value you create.
Challenges To Adoption
It’s important to be honest and realistic about the significant barriers facing the broader adoption of blockchain technology in the political industry.
- Federal campaign finance regulations that cap individual giving per election make it difficult for campaigns to fully unlock the potential of NFTs which are designed to increase in value because of scarcity and utility.
- Campaigns also need to make “best efforts” to collect and report the identity and other information of donors. Generally speaking, blockchain early adopters and crypto enthusiasts are not eager to share this information.
- But perhaps the highest barrier to adoption is the current Web 3 user experience. A user needs to have a wallet, fund that wallet and then pay sometimes costly “gas fees” to make the transaction go through. For an industry that still struggles with getting donors to fill out simple web forms, it’s a bit of a leap.
Political technologists must balance the desire to be early adopters with the fundamentals of winning campaigns.
First and foremost, there’s a direct connection between campaign merchandise and NFTs. Supporters are seeking ways to show their affiliation, dedication, and commitment to a political candidate or cause offline with clothing, apparel, and stickers. NFTs bring that into the digital era.
NFTs will go a step further than swag or collectibles and offer utility like recognition, access, and other perks. NFTs also come with added visibility as we’re seeing support for their display on social networks like Twitter. This is one way campaigns can connect social media profiles to material support.
Presently, there’s a lot of trust required to share data between candidates, organizations and vendors. The very opaque world of online fundraising rentals thrives on the reluctance of campaigns to share data amongst themselves even though it would lead to lower costs.
Smart contracts, enabled by blockchain technology, can create a zero-trust way to share data between vendors and campaigns. Conducting these transactions out in the open with smart contracts on a blockchain ledger could bring much-needed transparency to the industry.
When the use of a crypto identity is more widespread, it will function as a secure credential. Rather than setting up an account and password every time I want to use an application, I just connect my crypto wallet, the basis for identity.
Not only will this function as your login credentials, but it can get you access to certain features, signal to campaigns your experience and trustworthiness, and any specific training you’ve taken.
Taking it a step further, instead of signing a petition to give my information to a campaign, a supporter could use their crypto identity to decide what information to share with a campaign – and for how long.
Blockchain-enabled micropayments will mean campaigns and agencies can even pay supporters directly for providing their data.
The promise of crowdfunding in politics – that a group of donors giving small amounts can take on legacy interests in campaigns – has not been realized. Instead we see fraudulent tactics, ineffective politicians playing it up for the extremes in both parties, and a campaign culture that approaches digital like an ATM.
Blockchain technology could finally usher in the true potential of grassroots fundraising. Decentralized autonomous organizations (DAOs) are a combo legal entity plus decision making tool that are putting meaningful power in individuals hands.
Imagine issue-focused PACs or political organizations being replaced by DAOs of donors, volunteers, and voters who collectively make decisions about how to spend money on races, which candidates to support, and where volunteer hours will be allocated.
Another opportunity for the transformation of fundraising involves innovations like quadratic fundraising and pledged micropayments. I can make a pledge to your campaign that then gets paid out weekly, monthly or even daily, but the moment I don’t think your campaign is going well, I can stop the pledge. This gives you funds and data.
A major challenge facing politics as it grows into a maturing industry is the commission-based business model. Financial incentives are misaligned such that an individual makes more money when recommending the campaign buy more of what they sell. When you own a hammer, everything looks like a nail.
Organizing a campaign’s treasury as a token could transform the way professionals are paid by candidates. Instead of only being paid for what you sell, a consultant could get paid based on the performance and growth of the overall campaign.
Bringing Liquidity To Political Businesses
Investing in political businesses could become more accessible and attractive. Right now it’s not really feasible to invest in a partnership and it’s hard for businesses to capitalize for growth. Frequent career switching means professionals have to choose between serving in specific roles and maintaining equity in a business.
Many professional networks rely on an opaque system of referrals, often hidden from even their clients. With a blockchain ledger, those relationships can be made more transparent and accountable – if candidates and donors ask for them.
Similarly, a group of consultants, vendors and firms could temporarily join forces with a DAO to work on a specific campaign or initiative, better serving the client and making alliances more flexible.
Volunteers, Coalitions & Policy
Web 3 can make coalition interactions with campaigns more meaningful. Campaigns are rarely about policy, but what if candidates turned over aspects of their campaign to a community of advocates who develop and vote on policies for the candidate to support?
The advocates behind the policy will be more motivated to support the campaign with their time and money.
How To Prepare
It’s essential that you keep an open mind. There’s plenty of reason to be skeptical. We know that with new technology, first is not always the answer. Before Facebook dominated social networking, there was Myspace and Friendster.
At this early stage, the best way to learn about Web 3 is by getting hands-on experience. RabbitHole.gg is a helpful guide to begin your journey.
Develop your pattern recognition with blockchain tech trends and applications that could cross over into your area of expertise in politics.
This is an adaptation of a talk I presented at Campaigns & Elections’ CampaignTech East on April 7, 2022.