- Introduction - America
- Internet is the new America
- Bitcoin is the new Gold
- Ethereum is the new Banking
- DAOs are the new LLCs
Oh, United States of America. The land of the free and the home of the brave. A place that means so much to the whole world. A place that gave the hardworking people a dream - the American Dream. A dream that no matter where you were born, if you are an honest and hardworking individual you can come to America and give your family a chance for a better life.
As JFK, back then a US Senator, has aptly put it, the USA is a nation of immigrants. The ability of the United States to attract the best talent, the most hardworking people, to work in America and make it better, has played a crucial role in making the States what it is today - the number one economy in the world and the most prosperous nation.
And yet today, the reality of the USA's role in the world, and its stance on immigration has changed. What do we observe today?
- Regulatory capture that stifles innovation. The old boys club gets paid, entrepreneurs struggle to carve out a niche for themselves, and the general population sees no improvement in the quality of life since 2008.
- The regulatory situation is screwed up to the point that the largest successful startups of today - like Lyft, Uber, Airbnb - had to start their operations by breaking the law. The system that protects the status quo is that strong.
- Lawmakers lost touch with the population and cater to corporate interests exclusively. Both parties and presidential candidates push polarizing agendas and nobody is working to fix real issues and unite the people.
- New feudal clans have been formed and ossified. The Clintons, Trumps, Kennedys, Bushes, Cheney stay in power throughout generations - sounds a lot like Europe and China of the twentieth century, the places from where people would typically move to America in search of a better life.
Just like cheerful and hyperactive children become boring and slow adults, like casual startups become serious corporations with hierarchy, paperwork and dress code. So it seems, do the countries and their legal systems. The USA has simply grown up, and the tools it used to protect and foster innovation it now uses to protect and foster the status quo.
So where is a young, hardworking and entrepreneurial individual to go in search of a better life?
The Internet is the new land of the free, where people can move to and from anywhere in the world, work hard and earn a better life. Internet, as an American invention, seems to develop a lot with how America was built.
Initial exploration was tough and needed a lot of money, so it was done by big corporations and government-funded research. At some point joining the internet became easy enough for mainstream, and internet native businesses started to appear: e-commerce (stores), chat rooms (bars & saloons), porn shops (brothels). And these businesses need payment rails in order to operate.
Companies like Paypal and Stripe emerged that made it easier for entrepreneurs to start internet businesses and accept customer payments online. This was a massive success for the Internet, as it grew far and large, and became a fantastic way for both people to connect with each other, as well as for corporations to expand their reach overseas.
However, these services do not provide internet native money. They are just payment gateways for the system of the past, and thus they are beholden to rulers of the past. It's as if the USA today would use British Pound Sterling and Spanish Pesetas instead of its own Dollar. If you look at the largest global internet businesses of today you'll clearly see that Internet is a virtual colony of the existing system. And this begs the question: can this colony become independent?
The Internet cannot become independent without its own economy and its own money. Fiat currencies are primarily designed to protect the interests of the fiat. And once fiat interests start contradicting interests of people and entrepreneurs, this ignites the sparks of revolution.
In 2009 one such spark lit up under Satoshi Nakamoto, and he gave the Internet its first native currency - Bitcoin. More importantly, it showed us how people can collectively organize their work in a peer to peer fashion, without relying on Kings or governments - using something that is now called a blockchain. A blockchain allows the system to bake in the rules and force every participant to obey them. The majority consensus of the "full nodes" verifies that no rules have been broken without relying on the Kings, the judicial system or the Police.
By eliminating this antiquated reliance human interactions can be made more secure and more efficient. Just imagine how much we all pay lawyers, bankers, and politicians every year to ensure that our agreements are upheld. Now imagine these expenses drastically reduced, as 90% of deals are secured by peer to peer networks instead of high paid humans, and the savings stay in each family's pockets. Chances are that these savings will be far greater than Andrew Yang's $1000 UBI, and will work on a global scale instead of for USA citizens only.
There's still lots of work in order to realize this vision but it is within our reach. Today, Bitcoin is the most perfect store of value ever created by our civilization. It weighs nothing, it is impossible to confiscate without your consent, it is impossible to forge, and if you are careful with your private keys it can never be stolen.
Bitcoin is the gold of Internet. And while gold can be used as currency and medium of exchange, and was used before, it is highly unlikely that we'll see the so-called hyperbitcoinization, where merchants will price their items in Bitcoin and people will earn their paychecks in BTC, not without trustless, internet native banks and financial services industry.
Ethereum is the bank of Internet. Other smart contract chains, such as Ethereum Classic, TRON or EOS, can be described as banks too. These banks have different rules, different fees, and different security guarantees, and customers - internet native citizens - are free to choose the best solution for their needs. At this point, however, we have to admit that Ethereum is far ahead of the competition. You could say that Ethereum is the largest Internet bank with the biggest collection of financial services available to its customers.
Banks can facilitate deals (smart contracts), and they offer financial services, such as lending in a convenient, easy to use currency (DAI), and Ethereum does both of those things very well, better and more efficient than the legacy counterparts. Creation of DAI allows the internet to scale adoption. DAI is still internet native money, but mentally using it is just as easy as dollars.
It also allows businesses that have real-world supply chains that require real dollars for payment to be able to forecast their expenses when they enable customers to pay with cryptocurrencies, which is huge for global crypto adoption, the noble goal that drives us.
There is one more thing that banks can do for the economy that most people don't think about. In order to operate a business one has to open a business bank account. Here's where Ethereum beats any other bank - opening an Ethereum bank account is free!
A bank account allows the company to both accept customer's payments, as well as issue stock and distribute dividends to stockholders. Combining multiple people's investment into one business vehicle is called capital formation. Without companies and stocks, we would have never been able to undertake complex risky tasks such as Earth exploration, let alone space exploration. Being able to freely invest, and to freely raise investment is the key to an efficient economy.
2017 golden bull run showed that there is indeed both demand for global unrestricted investment opportunities, as well as a total lack of tools to ensure that this money is properly used. The biggest reason for that is the lack of control. People would send money over, get the tokens, but in most cases the tokens were useless, and naturally, the markets soon crashed.
Decentralized Autonomous Organizations (DAOs)
Luckily, the builders stayed and asked what went wrong? How can we fix it? And there is no better way to see how this needs to be solved on the internet than to see how this was solved in the fiat world before. The answer is to give investors power and properly align founder and investor incentives.
Nicholas Murray Butler was one of the leading thinkers of his age: a philosopher, Nobel Peace Prize winner, the president of Columbia University.
In 1911, someone asked Butler to name the most important invention of the industrial era.
Steam, perhaps? Electricity?
"No," he said. They would both "be reduced to comparative impotence" without "the greatest single discovery of modern times" - the limited liability corporation.
DAOs are the internet native Limited Liability Companies that come with a free Ethereum bank account! The trick is, of course, to create the right system of rules for the DAOs that achieve the stated goals. This space is still under exploration, with systems such as Maker, Digix, Aragon, DAOStack and Saturn Network each trying a different approach to making it work. You can think of these brands being the new forms of incorporation, just like today entrepreneurs can choose between LLC, C-Corp, B-Corp, GmbH, Ltd, etc.
The bear market has driven most of the speculators away and tarnished the name of cryptocurrencies, and most people who stay in crypto simply flocked to the old, stable use case. Enter bitcoin maximalism, with its complete disregard for new ideas and lack of understanding of how economies work. Indeed, the store of value use case works! The digital gold use case works! But there's only demand for it if we the people are able to exit the old financial system and embrace internet native money.
Making crypto-fiat bridges is not enough. We're not saying that having bridges to the world of fiat is bad, absolutely not! But if you've ever been in a negotiation you know that in order to fight for your terms you must be prepared to say no and walk away. We need bridges to fiat world, but we also need to be able to say enough of your bullshit, these terms suck, we're out!
And this will not happen without internet native banks that enable merchants to use internet native money via stablecoins, that enables companies to pay people in stablecoins. Neither will it happen without DAOs, which enable trustless incorporation and capital formation.
In 1911, the Limited Liability Company was dubbed the greatest invention of mankind. In 2020, the internet native version of the limited liability company stands to become the greatest invention of Internet.
Future is bright!
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