you
as we've previously talked about the
central aim in the development of an
enterprise or economy is linking the
individuals interests with the whole
organization in order to achieve optimal
overall outcomes in very small
communities it may not be very difficult
to maintain that connection in small
communities people can see that their
efforts contribute directly to the
overall value created and the overall
value created is in turn linked back to
the benefits that they will gain
likewise there is limited need for
centralized coordination
thus no great concentration of wealth in
the system and people may feel that it
is fair the problem with this model is
that it doesn't scale and allow for more
complex economic systems with
specialization of work as a consequence
over time larger more complex
organizations come to subsume these
smaller more basic forms if you want
really good scientists builders or
teachers they are going to have to
specialize in those activities which
will in turn require large systems of
exchange we invented formal centralized
institutions monetary systems large
market exchanges so as to achieve
specialization mass production and
complex economic organizations however
as we did scale there came to form a
disconnect between the individuals
contribution and the value to the whole
which creates the potential for both
negative externalities large
concentrations of wealth extraction and
inequality as the scale of the economic
systems that we are engaged in has
increased the interconnectivity and
interdependence between any two random
members has decreased because they are
farther apart in the network this has
worked to disintegrate traditional
cooperative institutions that are based
on local interactions and
interdependencies in the absence of
tools for interconnecting everyone
within a large national society we have
had to create the large bureaucratic
centralized institutions of today
but these centralized institutions have
created notorious divides within the
modern capitalist system between owners
and workers between producers and
consumers with the rise of information
technology and globalization we are
creating organizations that span the
entire planet creating massive divides
between producers owners and consumers
with the interests and incentives
becoming increasingly misaligned clothes
are produced in Bangladesh by people who
get paid half nothing revenue is sucked
up into a global financial system to pay
shareholders while end-users have no
loyalty or care for the organization
from which they buy their products there
is a massive misalignment of incentives
that creates a hugely inefficient
overall system we can analyze the
incentive structure of this organization
by looking at the centralized technology
platforms of today here we see on one
side we have value creators and the
other side we have value consumers they
are all coming together through some
type of central server platform for
example with uber you would have the
value creators on one side being the
drivers sending their information to a
central server and on the other side you
would have the riders that are using the
transport service from the platform in
the middle you have the platform and of
course the reason that these companies
are doing it is for profit so a portion
of the profit or all of the profit goes
up to the shareholders the users of the
system do not care if the value of uber
goes up or down all they care about is
getting from point A to point B that is
their involvement with the organization
and that's the limited vested interest
that this centralized structure is able
to take advantage of the drivers
likewise don't care about the value of
the overall organization they just want
to get paid and the shareholders and
management are only interested in the
quality of the service and the
conditions of the workers to the extent
that it affects the profits of the
organization likewise we can look at
Facebook and see that it is at odds with
its users Facebook's
and shareholders have made massive
amounts of money yet its users didn't
despite contributing the key personal
information and content that is the
central value proposition of Facebook
profits are drawn inwards and upwards to
the top management and shareholders with
its billions of users and high
engagement Facebook has become enormous
ly powerful in our world yet it's
controlled by a small handful of people
this is dangerous for society especially
given the fact that it is not really
structured to handle such
responsibilities the only reason that
these companies or shareholders are
putting forth the products is for the
money that they can make and that is the
entire business plan it is to maximize
profits and that drives our whole
economy what you have here is a split
between the users and the beneficiaries
rights and that creates a huge degree of
misaligned interest not only this but
there is no user vested interest the
users don't really care about the
success of the company in which they're
using that product that really leaves a
lot of value on the table because the
users engagement can be hugely
beneficial
touken economics offer the potential to
reintegrate this whole system breakdown
divides between users and producers
between workers and owners working to
align their incentives within a whole
ecosystem by connecting people
peer-to-peer in automating the
operations of the network blockchain
technology enables us to take out the
centralized component and reintegrate
producers and consumers into a much more
functional ecosystem of exchange
as illustration we can think of the
production of a movie currently this is
achieved through a centralized
organization for profit that then hires
producers directors and actors to make
the film which people then pay to see
with profit going to the investors but
this could be turned into a token
Network we use a blockchain network to
create a token call it a movie coin
actors directors and others get paid in
that coin that viewers have to buy in
order to see the film people can
purchase the token before production to
raise the initial capital to fund the
project thus cutting out the
intermediaries as another illustration
we can think about the fact that the
average tenure of an employee in Silicon
Valley is less than two years one of the
causes is the lack of alignment between
employees and the owners this is called
the principal agent problem every group
of people has principles which are the
owners and agents which are the
employees and it is easy for them to
become misaligned what may be good for
the employee may not be good for the
company in startups principals and
agents are the same that's why they are
all really motivated to work together
and can create a great amount of
progress rapidly but as the organization
grows there becomes a growing gap
between owners and employees and growing
potential for the misalignment of their
interests by creating micro economies we
can work to reintegrate the two
distributed organizations have no
centralized management structures for
controlling and coordinating the
organization the architecture of the
code is the rules of the organization
and people may have an input on how that
code is altered the aim is to have
autonomous actors who feel integrated
with the organization to create true
user engagement by functioning as both
equity and currency the token can work
to link the value of the ecosystem with
the value that people exchange within
that market moving to decentralized
ecosystems you really have the same
parties involved but you've removed the
centralized entity completely thus
closing the economic loop of that
company with a peer-to-peer token
exchange instead of sending money to a
centralised body with fixed fee
on both sides taking off a profit margin
these companies can introduce a token
because of the linkage between the value
of each change token and the value of
the network in the token system the
value generated gravitates not upwards
within the hierarchy but naturally
propagates to the token layer that
reflects the value of the whole
ecosystem and goes into the pockets of
anyone holding the token because it is
also a utility token it means that the
value goes to those using the network
the producers and end-users
in the example of uber imagine every
single user paid in a native currency or
a native token of the actual
organization itself and then every
driver receives that token and then they
sell it back to people that need to have
rides this closes the economic loop and
aligns the interests of everybody in the
organization you now have unprecedented
vested interest every single person
involved in that corporate ecosystem is
now invested in the success of the
organization just as everyone holding a
Bitcoin will promote the digital
currency to their friends anyone holding
the token of any network will be
incentivized to promote the use of that
network so you are turning the users
into evangelists another example would
be brave brave is a new token network
for the digital advertising industry it
pays publishers for their content and
users for their attention this service
creates a transparent and efficient
blockchain based digital advertising
market relative to the traditional model
an aetherium based network that
radically improves the efficiency of
digital advertising by creating a new
token that can be exchanged between
publishers advertisers and users by
connecting all parties involved directly
via a token market publishers receive
more revenue because middlemen and fraud
are reduced users who opt-in receive
fewer but better targeted ads that are
less prone to malware at the same time
advertisers get better data on their
spending and more engaged users what we
start to get our economic networks that
are really like a cross between private
enterprise and public utility we are
getting a hybrid of the community system
with its vested interests where the work
you produce is connected to the value of
the ecosystem but also getting the
option to exchange within broader
systems involving high levels of
specialization and complex coordination