How it started:
In 2018, West Virginia became the first U.S. state to allow internet voting by blockchain in primary elections - while the voter participation through this platform was estimated to be small, the intention of the administrators was to test the technology in a pilot project with no immediate plans to implement it at a larger scale.
The success of the initiative and the great advantages that the new method entails, has opened the gates to a future use of the technology on a larger scale and for various other sectors.
The idea of using blockchain for elections is worth more than just an experiment, however: for example, mobile voting using a safe and tested interface could eliminate voter fraud and boost turnout. It will make it more convenient for citizens to vote while abroad, irrespective of the distance and time. It could also be a beneficial tool for the election commission to maintain transparency in the electoral process, minimizing the cost of conducting elections, streamline the process of counting votes and ensure that all votes are counted.
Under the technology that was used in the West Virginia elections, a voter’s identity is verified using biometric tools like a thumbprint scan before voting on a mobile device. Each vote forms part of a chain of votes, where it is mathematically proven by the third-party participant. Using blockchain, all data of the election process can be recorded on a publicly verifiable ledger while maintaining the anonymity of voters, with results available instantly.
Now, if it works for elections, think about the usage of voting through blockchain in a large company that owns several branches or investors around the world… the advantages are countless!
Blockchain technology, considered by many as a once-in-a-generation breakthrough, offers a solution: through its simple and yet efficient design, blockchain provides the accuracy, transparency, and trust currently missing from shareholder voting.
Corporate decision-making will remain board-centric under the law, but the future is bright for advocates of shareholder empowerment: products built on blockchain could enable shareholders to engage with corporations in new ways.
New tools and networks could eliminate structural obstacles impeding shareholder involvement in corporate governance.
With a simple yet ingenious design, blockchain provides the accuracy, transparency, and trust currently missing from shareholder voting. Weaknesses with the technology remain: collusion, sensible governance, privacy, and technical shortcomings may hinder its potential.
However, variation already provide differing degrees of control and decentralization, facilitating flexibility and customization. Assuming these weaknesses are mitigated, the blockchain technology is poised to eventually revolutionize shareholder voting.
One potential innovation may be new types of stock classes: classes that provide unique services and incentives to attract (or deter) specific types of investors. Some may offer different degrees of privacy, automatic execution of options and warrants, tenured voting, or the connection of voting rights to company performance, but the result will be that the depository trusts, proxy service providers, and custodians essential to share ownership will face extinction.
The board-centric nature of governance will probably remain, but blockchain-based technologies will give shareholders new tools to coordinate and tear down obstacles thwarting their engagement, influence, and ability to hold boards accountable.
Activist DAOs are only one intriguing outcome and as for shareholder advocates, the future is – hopefully – very bright.
We discussed the theme of DAO in our previous article, you can find it here:
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