Upstart Australian political party wants to use Bitcoin as basis for governance style

A new Australian political party is using the virtual currency bitcoin as a model to replace what they say is an outdated political system - representative democracy - with a streamlined new polity for the information age.

The Flux Party says its goal is to elect six senators. They will propose no policies and will not follow their consciences, but will support or block legislation at the direction of their members, who can swap or trade their votes on every bill online.

"If they didn't have to be senators, if they could just be software or robots they would be, because their only purpose is to do what the people want them to do," Flux Party co-founder Max Kaye told Reuters in an interview.

Australia is set to hold an election in September or October after a period of turmoil that brought five prime ministers in as many years.

At the same time the upper house, which thanks to the quirks of its electoral system has a history of returning mavericks and fringe party candidates, has been hopelessly deadlocked by a handful of senators, at least one elected on less than 1 percent of the vote.

Prime Minister Malcolm Turnbull last week raised the possibility of calling an early poll to break the gridlock that has held up the government's legislative agenda.

That type of policy inertia is what bitcoin enthusiasts Kaye and Flux co-founder Nathan Spataro say inspired them to explore alternative systems that better represent the world of 2016.

Bitcoin is a web-based "cryptocurrency" used to move money around quickly and anonymously with no need for a central authority. The technology behind it is called the blockchain - a massive electronic ledger of every transaction that is verified and shared by a global network of computers.

To Spataro and Kaye, bitcoin is not just an alternative financial system: it is the missing link between representative democracy and Democracy 2.0.

"This ancient system we've got of representative democracy, which at the time liberated us from monarchies and was awesome, now we're at a point where it's become this monster," Spataro said.

"We're in a society now that's got the Internet and when democracy in its current form was conceived, you had to sail on a ship from England to get here. This model wasn't designed for this world."

"DELIGHTFULLY NAIVE"

Bitcoin's strength comes from its ability to build trust through ease of verification and by removing human frailty from the equation, said Dr. Adrian Lee, an expert on bitcoin at the University of Technology Sydney.

That makes what the Flux Party is proposing both unique and also potentially fraught.

"I haven't seen a party which would vote via blockchain," Lee said. "If you removed the politician and made it just a bitcoin machine, then maybe it would work but you can't do that," he said, noting the absence of a legally binding mechanism to make Flux senators vote as directed.

Although the party's architecture for calculating and distributing voters' wishes to their elected officials uses highly complex computer code, the overall idea is fairly simple.

Flux members and single-issue campaigners that agree to support the party at the election are allotted bitcoin-like tokens that they can use themselves, trade or give to experts or interest groups they trust to vote as their proxy.

Outcomes are distributed proportionately, so if 80 percent vote in favor of a bill and 20 against, five Flux senators vote yea and one nay.

Ministers are not often experts in their portfolio, and yet they are charged with making critical decisions on issues such as environmental or fiscal policy. Under their system, the Flux Party founders say, large blocs of voters could effectively grant their vote on such issues to a scientist or economist.

"You get sick, you go to the doctor, right? You don't self-diagnose and you don't go and call your plumber," Kaye said.

The Party filed its registration papers with the Australian Election Commission last month after obtaining the requisite support of at least 550 registered voters. Its website currently puts its membership at 1,009 people.

Attempting to apply the transformative power of the Internet to democratic systems is not a new one, said Peter Chen, a senior lecturer in politics at the University of Sydney, who called the Flux Party "delightfully naive people".

"They're just the modern version of something that's always been around: utopian political system designers," he said.

"They're obviously guys who are really focused on the tech thing and that has always been the problem with the e-democracy people. They're often really tech-driven and they need political scientists at the brainstorming floor to say 'well, I don't know if that'd work'."

(Reporting by Matt Siegel; Editing by Alex Richardson)