The uprising of the middle-class in France through the yellow vest movement seems to confirm what Karl Marx predicted in his famous book ‘Das Kapital’. His theory of class conflict between the rich and the poor should be considered in times likes this. In his analysis, he argues that capitalism is only a stepping stone towards socialism and then communism. At the root of the problem of capitalism is the problem of ownership of means of production. In our society, businesses raise funds by issuing equity and debt. Equity owners are shareholders and usually gets voting rights. Debt owners do not get that privilege but are guaranteed to receive their money in case of bankruptcy. The shareholders of the company are the sole owners of the means of production in a company and benefit of this position by ’exploiting workers’ with an unfair salary. This, according to Marx, would result in the upheaval of workers due to their numerical superiority and allow the economy to transition into a communist one. However, the massacre of Stalin and Mao’s regimen showed the inefficacy of such economies.
Fast-forward to 2008 with the invention of Bitcoin and blockchain technology altogether, a new asset class has arisen that no one seems to be able to define. Cryptocurrencies share the same properties as equity as they can allow autonomous voting governance and are investments that yield returns. They also exhibit the aspect of a fiat currency as they allow exchange and store of value. Classifying such an asset has been puzzling economists and finance pundits since the inception of Bitcoin.
More and more startups have been raising funds through the process of initial coin offering, but large skepticism remains as there is no wide acceptance yet. Furthermore, many of these ICOs proved to be scams. What’s preventing wide acceptance is that these ICOs are for startups with no revenue generating processes. Investors are essentially betting on the technology to be lucrative, but no real business model is being proposed.
What if the business model was the following:
_ Bob has a business idea. He believes he can make the best fries in the world with his awesome secret recipe and sell them worldwide. He has this cool dream where he owns a nice shop in New York, lots of people from over the world are coming because his fries are so good, and he has a few employees helping him out. However, he doesn’t have enough capital to make the early investments required. He could go to bank to borrow, but his poor credit score doesn’t allow it. But he doesn’t lose hope and after countless hours of research hears about DAICOs as a way of raising funds. He contacts blockchain developers asking them to develop a cryptocurrency specially designed for him. Let’s call this crypto-token Bobcoin. Bobcoin would enable a distributed autonomous organization called BobCorp to make executive decisions with Bob as one of its members. Any owner of Bobcoin would have voting power. So far, not much is different from existing blockchain cryptocurrencies. However, Bob suggests that all his fries must be paid in Bobcoin (Customer exchanges his dollar in Bobcoin and transfer the Bobcoin) and that any revenue that the company receives must be stored in a BobCoin wallet belonging to the distributed autonomous organization. This increases the value of BobCoin relative to the dollar and other crypto-currencies through spill-over effects. This wallet would essentially be the bank account of BobCorp. A general ledger of the company can therefore be constructed by directly looking at the blockchain and searching for all transactions linked to BobCorp’s wallet. The DAO would then decide what to do with the revenues, i.e: invest, expand, increase salaries etc... One key feature of this model is that the employees are paid in Bobcoin, thus giving them some decision-making power too. Owning a Bobcoin is the equivalent of being an owner of the means of production of Bobcorp, i.e a shareholder. Therefore if the employee can save a bit of their salary, they can have their say about the company’s governance. Additionally, employees have twice the incentives to work hard due to their direct impact on revenue generation and thus the value of Bobcoin.
The problem is that it might be difficult to have employees accepting Bobcoin as salary if it isn’t accepted as a mean of payment everywhere. An optimal situation would be to have crypto-exchanges openly accessible to everyone such that anytime someone wants to make a payment with the crypto-token they own, they can exchange it into the payee’s crypto-token and then transfer the latter to the payee’s wallet.
Assuming the above holds, BobCorp could work like a normal company according to today’s standards whilst achieving partly or fully the utopia of Marx where there is common ownership of the means of production by the employees. If an entire economy were to be running with only companies with the structure of BobCorp, inequality due to structural in-built capitalistic characteristics could be eradicated. Bear in mind that it would not yield a system where everyone is equal, and everyone has the same amount of money as meritocracy would still prevail. Company X yielding better profits than company Z would result in inequality in their crypto-currencies’ value which applies to the employees and investors.
I believe that if we, as a community of crypto-enthusiast and cyber-punks of different kinds, can come together to develop the tools and the framework required, the described economy can become a reality. Or maybe I’m wrong.
Anyhow, please let me know your thoughts on this. I’m badly in need of constructive criticism, so please throw all you've got.
Or message me privately via my email:
ImFrodoBaggins17@gmail.com
