Exploring the Ideological Differences between Blockchain and DAG: Individualism vs. Collectivism

In our previous articles, we discussed the technical and power distribution differences between blockchain and DAG. Now, let’s take a look at their ideological/philosophical differences.

They are fundamental.

As noted in Distribution of Power in DAGs and Blockchains, users in blockchains can only create transactions but have to rely on block producers to add them to the ledger, while DAG users both create transactions and add them to the ledger without the help of any third parties.

This means that DAG users have full autonomy, full independence, and full control of their lives (as far as distributed ledgers are concerned), which relates to individualistic values. They are on their own and no one can stop them. No group can stop them either, even if that group is large or dominant in any way.

It is not so in blockchains. In blockchains, user transactions have to be approved/accepted by block producers. It is block producers who have the final say about adding every transaction to the blockchain. Assuming that block producers represent the community in some way (the quality of representation is another question) and the majority of the community doesn’t want your transaction to be accepted for whatever reason, the block producers do have the power to block it. That is, the collective’s representatives have the power to intrude on an individual’s life.

The collective’s ability to block any transaction means that the private property that resides on a blockchain is conditional on the approval of the majority. This way, it cannot be regarded as private property to the full extent.

This is in line with the collectivist belief that “man has no rights except those which society permits him to enjoy”.

In blockchains, the community has to protect what the technology can’t

The above conclusion doesn’t mean however that all property stored on blockchains is in immediate danger. Since collectivism’s goal is “to do the greatest good to the greatest number”, you should be fine as long as you belong to “the greatest number”.

Remember, we are still assuming that block producers perfectly represent the community, and what they think is “good” is what the majority of the community thinks is “good”.

As long as it is the case, the community’s values can protect the individual from excessive intervention by block producers.

Here are two examples:

In early May 2021, Marathon, a large Bitcoin miner, started censoring non-OFAC-compliant transactions in an effort to stay “compliant with U.S. regulatory standards”. This initiative was met with strong criticism in the Bitcoin community, and by the end of the month Marathon stopped this practice stating that it “is committed to the core tenets of the Bitcoin community, including decentralization, inclusion, and no censorship”.

In August 2022, after many US-based Ethereum businesses started censoring the OFAC-sanctioned Tornado Cash transactions, Brian Armstrong, the CEO of Coinbase, tweeted that if regulators asked them to censor at the protocol level, he would rather shut down the validator service than comply with censorship requirement.

This is great when blockchain communities are strong enough to protect the freedoms of their members. Some of these communities still have the core built around protecting individual freedoms against government interference. After all, blockchains were a huge improvement compared with banks and other centralized ledgers (such as PayPal) in terms of freedom to move one’s own money as one sees fit. That was definitely the case as block production was (and still is) largely unregulated.

However, there are no guarantees that a community that is strong now will remain equally strong in a few years, or that outside pressures won’t grow. Likewise, there are no guarantees that the original values-based core won’t be washed out of the community and replaced with those who see crypto as a way to get rich and are more likely to compromise on the freedoms of the individual.

Blockchain technology permits that. There is simply too much room left for human decisions. There are too many variables.

DAG-based ledgers are the opposite — the technology ensures the individual’s rights and leaves no room for any interference.

Separation of concerns

Even though DAG strongly favors individualism, it is still a community whose members have a common interest in upholding the network. For this, they might have governance processes and representatives to help them make decisions about the network as a whole.

In Obyte DAG, we have Order Providers (OPs), and their main task is regularly posting transactions to help all the nodes establish order on the DAG. Their other task is updating the list of OPs, i.e. removing some old members from the group and accepting new ones to ensure continuous operation of the network and orderly governance in the future. For example, if some OPs become subject to external pressures which would oblige them to censor some transactions, such OPs should be replaced by the remaining ones before the coercible OPs become a majority. Or, if an OP becomes less interested in supporting the network, or just a better candidate comes up, they can be replaced too.

It is important that in this design, the collective decision-making and activities of the community’s representatives (the OPs) affect only common resources — the order of transactions on the network or the health of the network as a whole. Neither the community nor its representatives can do anything to intrude on any particular individual’s life. That is, the collective manages the collective’s resources, while every individual manages that individual’s own assets.

This separation of concerns exists in DAG, but not in the blockchain.

Just a tool

Now, this is not a discussion of whether DAGs are better or worse than blockchains, or whether individualism is better or worse than collectivism. Both blockchain and DAG are just tools, and should be chosen according to one’s goals and values. As we have shown above, blockchains better align with collectivism, while DAGs better align with individualism.

This means that blockchains are a better fit for tasks where the interests of the community as a whole should be prioritized over the interests of any individual or a minority group within the community. Note that in practice, the community’s interests can only be expressed through representatives (not directly) and the quality of representation matters a lot. The representatives are powerful, and if they become subject to outside pressures, or become driven by self-interest counter to the public interest, or start serving the highest bidder, such a blockchain benefits neither the community nor the individual.

DAGs, on the other hand, are a better fit for tasks where individual freedoms are of primary concern and the individuals need a neutral, ownerless medium through which they want to do business with each other. The medium doesn’t impose anything on them, it’s only a conductor of their free will. Of course, the medium has its rules and restrictions (such as: every transaction must have a valid signature and spend existing coins), and these rules are enforced purely by technology and are equal for all.

Depending on goals and values, one can choose blockchain or DAG. For the purpose of creating a long-term store of value where assets cannot be blocked or confiscated by the will of the majority, DAG works better.

Also published here.