The past year, I’ve delved deep into the blockchain rabbit hole, exploring all the opportunities (from building on payment channels, launching an altcoin to starting a payment search engine).
A lot of the ideas I worked on (from tipping, to creating new networks of value, to thinking about personal currencies and VR in the blockchain) has collided, and eventually lead to something new I want to introduce.
It’s called an Automated Network Investment Contract (tentative name). Other phrases could be: Automated Profit Share Contracts, Networked Investment Contracts, Automated Networked Sustainability Incentive Contracts. This is a continuation of CPDAOs I posted about previously.
It comes down to the following: automatically generating new wealth from being involved in different networks. The term “network” is purposefully open to interpretation as it can be anything: from people, to ideas, to companies, to cities, to artists, to fans, to nature, anything. Anything that has a network effect. And that is myriad. For the most part of our history, we’ve only really managed to capture networks of value in terms of a company (property is another). That made the most sense. We construct a set of rules to allow ownership in companies, so that the owners can generate income from it. What essentially happens is, is the value flows *through* the company and some of that profit is distributed to the stakeholders. As we know, very, very few people have access to enough capital to own parts of companies unless they eventually go public. Even then, the people that require ownership stake in things that produce “profit share”, won’t be able to buy any of it. While a person in a poor, rural community CAN buy public stock, they often don’t have enough wealth/money/knowledge to do that.
We’ve built monolothic institutions to maintain this, because that’s all we’ve known and *could* build.
But with cryptocurrencies, we can remove all the cruft and risk and generate automated investment contracts: allowing ownership in a lot of things not possible before.
One of the problems I’ve had with the idea of 7 billion personal currencies is the concept of liquidity between all the different networks of value. Exchanging large amounts of value between low liquidity networks introduces a lot more risk. The maintenance of all these tokens would be a UX nightmare. Not even mentioning the possibility of people to prematurely short a famous person’s stock just before they assassinate them. Or, for that matter, the possible embarrassing scenario where a person’s stock loses value and they don’t want to be involved with it anymore (ie, no “sunsetting” possibility).
An Automated Network Investment Contract does away with a lot of these problems, doesn’t require new tokens and allows any network to be quantified (its up to the imagination of the people). Here’s how it works. It is surprisingly simple.
When you send money to the owner of the ANIC, part of the money goes to the owner, and part of the money goes straight to the stakeholders. You then automatically become a stakeholder. You then earn revenue from any subsequent payments to the ANIC up to a certain point.
It is thus collapsing the usual actions of having an ownership token (“stock”) and distributing “profit share” to it, in one action. There are thus no concept of a “stock” or a “token” of ownership. You are involved only as much as the contribution you make to the ANIC. Depending on the timeframe of the contract (depth of allowed stakeholders), you automatically leave it after some time, which represents your involvement with it. If you go the ANIC again for something, you re-enter your involvement.
This is a much more natural order of things. We ALL contribute to networks of value simply by “being”. By posting on this blog, I promote Tumblr and its success, however I’m not getting any profit share from it. Suddenly, in a world where we thrive on the value being produced by the zero marginal cost society, we become the products and we have to rely on something like advertising to sustain a network. Additionally, all the value that’s being created is only captured by a select few, which is completely lopsided. We are becoming the most creative society in history. We value a great tweet. We value a great photo on instagram. We do on some level understand that what the person has contributed should probably be correlated to a social IOU they should use to sustain themselves (rent, food, etc). But the current networks of value just doesn’t add up to that.
So, to go more in depth, here’s an example.
You frequent a coffee shop every day. Every time you buy a cup of coffee you pay the coffee shop. They take say 90% of the money, and the 10% gets distributed to the previous stakeholders (people who bought coffee before you). As you usually would, you tell your friends about the place, because it has great coffee (note: there would still be incentive to be honest as lying to get a return reduces the impact of your recommendations). The network of the coffee shop grows, and new payments to the ANIC of the coffee shops produces value for you. In some cases, you could generate the coffee you bought back. If you bought a meal, your investment would be automatically bigger (but only in relation to the fact that people mostly buy coffees there). It’s a relative difference to the usual payment amounts stored in the ANIC.
Similarly, an ANIC could be used for *any* payment endpoint, which can catalyse ideas & movements because people can get involved and share ownership where it wasn’t possible before. For example: tipping. If you like a piece of content, you can tip said creator. They receive 90% of it, and you will receive returns in the near future from subsequent tips. So, in other words, it creates incentive for value to flow simply to ideas. It can be a way for us to pull ideas more quickly into reality and give rise to movements automatically without any required existing tools.
For example. An ANIC can automatically send any funds it generates to a multi-sig address controlled by say 5 people leading an agency to promote the emphasis on sustainability.
An ANIC could even pay out automatically other ANICs to create smaller pockets/networks of value. For example, a band could release and album, and that album would have its own ANIC. Payouts to it will automatically flow into the band’s main ANIC (to promote ownership in both).
Similarly, someone can create only an *idea* for an ANIC. The ANIC would be a catch-all contract. An “environmental” umbrella ANIC would automatically split the revenue to several other ANICs. So the owners of that ANIC won’t generate any value from it. They simply helped to combine smaller networks into a bigger one.
Following on from this. Something we already take for granted and know. Our reputation is becoming more and more important… but we simply can’t buy a beer with a “chunk” of our reputation. The thing about an ANIC system is that your OWN network effect becomes a tool to create value. Simply by being involved with a lot of things, you can create value for yourself.
So, hopefully this creates a lot more liquid world where ownership is possible (and unlocked) for everyone. A local corner store. A person. An idea. Anything.
Ultimately. What it comes down to. To explain it in more understandable terms. We create “companies” of everything. We remove the organisational complexity of “stock” and collapse it into a simple automated contract for sharing ownership. To create the most wealth in this world will still be the domain of the creators as it always have (because an ANIC pays out constantly to the owner of it). Except, we unlock new networks of value that simply wasn’t possible before.
How will this work technically? Here comes the fun part.
I’ve given some thought about this. Currently, I’m having trouble thinking of ways to do this in Bitcoin. However, with the upcoming Ethereum platform, where “contracts are 1st-class citizens” it is much easier.
In short. The basic idea and parameters are as follows: There is a depth of how many stakeholders are in the contract at the same time. 10. 100. 1000. 10000, etc. It is a queue (first-in-first-out). If you pay, you get in at the top. Depending on your proportion relative to others, you receive income from each new payment through the ANIC.
The ANIC owner can set the percentage difference. 10% revenue share to 90% revenue share. Whatever works. I suspect an optimum will be found (might be different depending on different concepts). A marketplace could also exist. A new coffeeshop might increase their revenue share portion of it to attract new customers. Another thing to consider is liquidity. If you pay a popular ANIC contract you generate money quite quickly. This means popular contracts will attract more people. Marginally you want to promote people finding new things (with lower liquidity). Either that will be solved by market behaviour (owners of ANICs set depth and percentage), or the ANIC automatically adapts over time (smaller depth with higher liquidity for example).
Since Ethereum allows contracts to store information, this concept seems relatively trivial to implement. I just need to get around to learning the ropes.
At the end of the day. This seems like a definite possibility to allow people to automatically partake in revenue sharing in every network they form a part of.
A lot of my thinking this year has mostly been looking at what potential the blockchain has to increase agency of people, especially in a world where “software is eating the world”. We need to invent new ways to represent social debt to each other.
P.S. Perhaps I should call this the “Web of Wealth”, both in reference to WWW and Dogecoin (which started a lot of all of this thinking).