New Economic Space
“WE THE PARTNERS, in order to lay foundation for new economic space, declare an abiding confluence of interests which compels us, out of our own personal agency, to form a sovereign Partnership….”
The above is the preamble to the partnership agreement forming the the Economic Space Agency, a decentralized community creating financial tools for the creation of shared value and abundance. More on that later. First you need to understand why…
Money is like gravity. At least money as we know it. Money is what grounds the shared valuing of natural resources, our labor, and the workproducts of our labor. But like gravity, money keeps us grounded in a well-known “physics” of human potential. This physics is rooted in a world of generally scarce resources and diminishing returns to scale.
Money was invented long before the rise of the internet; long before network effects and increasing returns to scale; long before social networks, where communities and trust are formed between individuals who are thousands of miles apart (and may never meet face to face).
Forces like gravity not only limit how you can move in space (and what parts of space you can get to) but they also warp space itself. In other words, because money was invented thousands of years or before computers and the internet…
What is an “economic space”, you ask? Any system of rules and financial incentives creates an economic space. Markets (of all sorts), neighborhoods, nations, games, unions, insurance plans, corporations… these are all examples of economic spaces. And just like physical space, we often take for granted the rules and incentives of the economic spaces we inhabit and participate in.
Current financial technology platforms — like banks, marketplaces insurance companies and social networks — operate with command-and-control structures based on conventional economic incentives. They do not offer people the power and flexibility to choose and design incentives and value creation the way they want.
Economic spaces create emergent behaviors between people. Are people able (or likely) to cooperate, and if so how? Are there incentives for repeated win-win interactions, or is every transaction a singular event, driven by competition on price alone? Do participants feel a sense of community and shared purpose or do they feel like lone wolves hunting for their personal edge in a hostile world?
Technology is now emerging that will allow us for the first time in history to create new economic spaces, ones that enable different economic realities than we are used to.
By combining blockchain and smart contracts with the right intentionality, shepherded by a community of like-minded explorers, we can create new possibilities for mutual benefit, benefit to society and the planet. We are on the brink of creating new economic spaces that have only been dreamed of before.
Already the “new physics” of economic space is becoming clearer (see here, here, here, here, here, here, and here). Already, new spaces are emerging, such as crowdfunding (here and here) and personal finance alternatives (here and here).
The possibilities ahead of us are endless. Here’s just some of what’s coming…
New Economic Space Examples
Decentralized Hedge Fund Cooperatives
Governments issue their own currency on the promise to provide future value to the holders. Why shouldn’t we each be allowed to do the same? See Personal Vintage Currency for more.
Decentralized Autonomous Corporations
A corporation is a collective of individuals cooperating to create products and services which they sell on the open market and thereby collectively profit. Well, with the help of technology we don’t need physical space, legal structures or even a governing jurisdiction to do that, we can just decide to do it! Will the Next Uber be a DAO?
Global Good Brokerages
“Old physics” tells us that doing well for yourself and doing good for others are like matter and antimatter. New economic physics reconciles the two while creating new value not possible in the old models.
Time Banking & Other Social Currencies
If time is money, then why can’t we use it like money? Time banking has been around for decades but now is finally taking off thanks to blockchain technology (see here and here). Your time, however, is just one of hundreds of valuable currencies you have, either by virtue of being alive, or by the hard work you’ve done and relationships you’ve built over the course of many years. What if you could get paid immediately for making introductions that lead to new business opportunities? Imagine if you could monetize your reputation for keeping a secret? Or your artistic skills? Or your generosity?
The only way to combat fake news, media bias and truth bubbles is to make it financially more attractive for people to tell the truth than to lie. Prediction markets like Augur allow smart people to profit from knowing the truth. What if we created a market where everyone (including journalists and politicians) gets a “truthiness rating” (see here for example) so we can know how to weight what comes out of their mouths as likely being true or not? On the flipside, if some hacker in Macedonia wants to infect my social network feed with clickbait that makes them money, why shouldn’t I get paid for reading it? Crytpocurrencies like Synereo’s AMP are designed to help you monetize your attention on the social web.
Insurance companies make billions of dollars a year in profit for reducing our risk. But nothing says we can’t just hedge our risk collectively ourselves using smart contracts. Do we really need to pay experts to do actuarial underwriting and to process claims? No, artificial intelligence and crowdsourcing is proven to be more effective, so let’s just keep that process to ourselves as well. Furthermore, we can invest our premiums and pay dividends each year to ourselves as policy holders. It’s decentralized, globally hedged captive insurance for the 99%.
Equity Liquidity Pools
Any veteran of the startup world has equity in one or more companies that could someday be worth millions, but which is currently risky, and completely illiquid. What if we could pool together a diversified portfolio of individually risky and illiquid holdings, and sell shares in the pool to willing buyers at a fair market price? This would both reduce the overall risk and create liquidity for any asset-holder who needed it.
Corporate Profit Unionism
Fortune 500 companies as a whole make about a trillion dollars a year in profits. Meanwhile their 28 Million employees make an average of $53K each (as compared to $16 Million each for the 500 CEOs). Due to a number of factors, our right to unionize has been rendered almost completely impotent in the last 100 years. Now with smart contracts, employees of profitable companies can register anonymously to strike for a share of the profits; once a large threshold (e.g. 75%) register, the strike is automatically put into effect and made public on everyone’s social media. If profits were distributed to the people who created them, then shareholder dividends would go away and stock prices might be negatively affected in the short term. But employees would get a 40% profit bonus across the board and be incentivized to increase profits even more in the future. Ultimately this is better for shareholder value and employees.
Many of us get shitty utility and public services from the cities we live in as well as from the private providers (like cable companies). But we have no true voice, no way of organizing effectively and overcoming the bureaucratic red tape in order to make change. Yet we pay significantly for these goods and services in the form of taxes, utilities and other recurring household bills. What if we all went on strike from paying these household bills together, organizing using anonymous blockchain technology? “Hey Verizon, can you hear us now that your entire revenue stream is shut off?”
Historically, the sovereignty of nation-states is relatively new, and already in decline due to competitive pressures and new technology. What if you had a choice and could switch your “government service provider” (GSP)? What if you could choose which entity or entities provide the citizenship services of government in exchange for fair, market-priced taxation: protection from violence internal and external; enforcement of basic rights and obligations of citizenship; a legal framework for interacting with fellow citizens; a passport that is recognized by other nations; and so on.
Well-funded collectives are organizing online to declare sovereignty from existing nations. Seasteading aims to create floating nation-states on the high seas. BITNATION is a Decentralized Autonomous Organization that also serves as a GSP, allowing you to create your own sovereign nation using their platform. Both BITNATION and Seasteading are are forming treaties with existing sovereign nations to be recognized on equal footing. Refugees and billionaires alike are starting to switch their GSPs…