What is Plutocracy?

A plutocracy or plutarchy is a society that is ruled or controlled by people of great wealth or income.

The key aspects of this definition are 1) what is being governed, and 2) who are the governors, but I think it’s also important to consider how the governors set the rules.

What is being governed?

Plutocracy refers to the governance of a society. Blockchains are not societies, but it’s hard to define what the appropriate frame of reference is because blockchains are a new class of socio-technological entity. Relevant frames which spring to mind are States, Companies and Utilities.

1. Deciding whether to adopt changes to the consensus rules of the network. This is primarily what on-chain governance refers to. There is a formally defined process for changing the consensus rules, it is defined within the protocol itself. That process involves 75% of voting tickets saying Yes to the change within a voting period of 8064 blocks (~4 weeks).
2. Deciding how to spend a project fund. There are quite a few blockchains now that put some proportion of the block reward into a fund for developing the project. Most of these projects (and all of the ones I’m interested in) aspire to decentralize control of how these funds are spent. Dash has been doing this with a fairly simple DAO setup, operated by the votes of MasterNodes, for almost three years now.