Money, as is known, has always played a very important role in politics, with donations to candidates’ election campaigns being essential, especially in America. Blockchain technology can play an important role in fundraising platforms.
For years, most of the power over campaigns and political issues has been concentrated in the hands of wealthy people in the US who donate thousands of dollars to the campaigns of their preferred candidates. In other countries as well, the financing of political parties and activities has always been a matter of discussion.
Politics is expensive and not for everyone, despite the fact that, constitutionally, everyone has the right and the duty to participate in the political life of their country. Recently, however, thanks to the spread of blockchain technology and the web, something has changed. Fundraising platforms for smaller campaigns have allowed a wider segment of the electorate to participate in donations.
In any case, the large group of donors still has an overwhelming influence on political priorities once the elections are over, explained Bill Warren, co-founder of Peeps Democracy, the blockchain platform for political campaign fundraising.
Elected politicians listen more closely to “the individuals creating the large checks,” says Warren, which suggests that the concerns and triggers most significant to little donors normally “get misplaced in translation“.
Warren believes that blockchain technology can help ensure that democracy has the same weight for both the rich and the less well-off. He and the co-founders of Peeps Democracy are convinced that a combination of crowdfunding, blockchain voting and encryption-based incentives is enough to give small donors a more powerful voice in American politics.
The first application they are building, called We the Peeps, is a fundraising platform designed to “allow ordinary people to raise money on issues or causes and then vote on where to direct it,” Warren says.
There is already a very popular platform oriented towards small donors: ActBlue, a non-profit technology organisation founded in June 2004 that allows democrats, progressive groups and nonprofit organisations to do fundraising on the Internet by providing them with online fundraising software.
ActBlue says it has raised more than $3.5 billion since 2004 and an analysis by FiveThirtyEight and the Center for Public Integrity found that more than half of all individual donor contributions to democratic candidates for Congress in 2018 were made through the platform.
But what Warren still believes is missing is an online crowdfunding platform where it is the donors who lead, not the candidates. This is what he envisions for We the Peeps.
At the heart of the fundraising system, there is a cryptocurrency based on Ethereum called Peeps. The website will guarantee users a certain number of peep tokens at the time of registration. The tokens can be used to perform various actions on the platform.
For example, to start a fundraising campaign, called “movement”, a user must freeze (or “stake”, in blockchain language) 10 tokens.
Movements can be initiated around specific political issues. In the small private test that the company is performing at this time, a user has initiated a movement around climate change, for example.
If a movement grows in terms of supporters and commitments, the person who initiated it will earn more tokens and, in turn, more influence. Users can also suggest to politicians a certain movement to which they think they should contribute. People can then vote for those suggestions to decide whether to make a donation.
At the end of the vote, a third-party payment processor called the Democracy Engine will distribute the money to the winning candidates. Warren hopes that eventually, the platform will be popular enough for politicians to start competing for these prizes.
Peeps Democracy will generate revenue by taking a commission of 4.75% in addition to donations, similar to crowdfunding platforms such as Kickstarter. Target users are voters who desire transparency in politics, particularly millennials.
The project could also be thought of as a decentralised version of a Policy Action Committee. The so-called PACs are organisations that collect hundreds of thousands or millions of dollars from large donors and distribute the money to their chosen candidates, $5,000 at a time.
There are different types of PACs, which vary according to the legal requirements they have to follow. Super PACs, for example, are a popular way to raise huge sums of money to support political issues and causes but are not allowed to contribute to election campaigns.
Blockchain technology has long been considered a tool for the expansion of democracy since blockchain networks are not controlled by a single entity and are very difficult to censor or bribe.
A shared database of transactions, which could include voting, is inherently more transparent and open, Warren argues. So far, however, most of this discussion has focused on the use of blockchain to count votes during elections.
But this is a controversial issue: many voting security experts say that blockchain would create more problems than it can solve.