This blog was written by Bird Lovegod, Fintech journalist and consultant.
Shareholder and board voting on blockchain. On the face of it it seems like a jolly good idea.
Private blockchains can be ‘invite only’ and invited parties can be either Directors or shareholders or both.
For shareholders, with different numbers of shares, from few to millions, with different voting rights and values, geographically distributed, making important decisions than can have $ million or $billion impacts, voting via a blockchain system could be a rather beneficial. For a start, it might increase turnout. Just for the fact of it being on a high tech system with a (hopefully) easy to use user interface.
Vote counting would of course be automatically done, and could also provide additional information on voter demographics, how small shareholders vote compared to major ones, for example. Recounts would be unnecessary. Disputes reduced. The speed of the process could be accelerated. An immutable record of each voting matter, and the outcomes, would be automatically generated and stored.
The same would apply to directors voting, albeit on a much smaller scale, the number of directors being far fewer than shareholders.
So, has such a thing emerged yet? Or is it still in the pipeline, or even a pipe dream?
Let’s have a root around and see what we can find.
Here’s a proposed system, explained in the format of political elections. It must be said, governmental voting is probably not going to be the first user case for this kind of technology. If anything it’ll be the last. There just isn’t the demand for it, from voters or politicians or regulatory bodies. There’s also the ‘black box’ of blockchain, the system may be secure, but for almost everyone it’s fundamentally opaque in terms of how it works. Paper votes, yes, they can be understood. Digital votes, yes, that too is familiar. Blockchain votes... it’s a big ask to trust a democratic process to a technology no voter or politician is familiar with.
Focussing only on shareholder voting, the Kas Bank case.
The article explains a little about their intention to test it, that was last year, April 2018. There’s nothing following on from that so it’s hard to know the outcomes and conclusions. The technology came from their own KasLabs, an in house dev team presumably.
Hmmm. Let’s see what else we can find.
This is quite interesting, and also points to the legislative issues arising from such systems, a US based take on the situation. A quote reads “Stock exchanges around the world have been exploring the use of blockchain based voting systems for years. Some foreign stock exchanges, such as Abu Dhabi Securities Exchange, use blockchain based voting systems for shareholders of listed companies.” So indeed it may be that such systems are already widespread, or even normal, in regions other than the UK / EU / US.
This next article explains the same opportunity, and details some of the many problems with existing voting systems, including inaccurate and incomplete sets of lists. To quote: “The inadequacies of the corporate voting process are well documented. Votes are tabulated using an archaic process that involves compiling ledgers that are separately maintained by the numerous stakeholders involved in governance. This regularly results in inaccurate voter lists, an incomplete distribution of ballots, and chaotic vote tabulation. Broadly speaking, these issues deal with transparency, verification, and identification—all of which are at the heart of the advantages offered by blockchain.”
Santander explored it at their Shareholders meeting in March 2018. They didn’t run a ‘live test’ with it, instead a ‘shadow test’ which duplicated their existing system.
Over all, shareholder voting seems to be an area where blockchain has a strong user case, with considerable investment driving it. Expect more progress.
And we never mentioned Brexit once.