Nearly all business models these days are overly shareholder focused and I suppose for good reasons. The extent to which government issued currency is being debased and manipulated warrants such a behavior as high returns are needed to offset the debasement of the currency. Overtime, you end up with asset bubbles, velocity of money going down and that leads to a period of stagnation which is what we are seeing in today’s economies. Demographics play a big role too so lets not forget that one.
Charts above by https://twitter.com/LynAldenContact
Chart above from: https://wtfhappenedin1971.com/
If you have a look at the chart above you can see how the wealth disparity between the haves and the have nots continue to increase. Some of the reasons are:
- Inflation due to currency manipulation (amount created and interest rates)
- Technology / Automation
As a result of the first point, the essential things people need to consume/use continue to cost more, all whilst salaries do not rise as fast for the bottom portion of earners (see charts above).
If Technology / Automation will erode a portion of the lower paying jobs, then that means the poor folks are being hit twice as hard. Once by policy decisions and the second by technological advancement.
The people negatively affected will either need to re-skill (which requires a reasonable amount of time/money) which they probably don’t have. Or the other option is to invest their income/savings where it increases in value and pays enough to beat out inflation.
I guess everyone could just dump there fiat into hard assets and do nothing, but is that what we really want to do… encourage less economic activity because everyone wants to hide in gold and bitcoin?
Hell no, shit would hit the fan. We NEEEEEEED real sustainable economic activity otherwise everything would crumble.
We need to create business investment which require holders of wealth to invest money into things that create jobs and preferably take us back to full employment. People that earn money from their jobs will spend money; those people who get paid money will again spend money. Here we have economic activity. Of course, you would need to incentivise wealth holders to make the investment in the first place and in such a way that encourages real economic activity so they don’t just buy up things like real-estate and gold.
Now, If you only have a few people participating in the upside, you will get a concentration of wealth, combine that with an inflationary monetary system, you eventually put the brakes on real economic activity. This is what we see today.
Therefore, we don’t want just a few shareholders to benefit from that capital investment, we’d also like the average joe to be able to participate in the upside too.
An example is Celsius.Network, go look them up or check out another one of our blogs where we have written about them. 80% of their revenue goes straight back to their customers. If the customers have more disposable income, then they are likely to spend a portion of that income on things that create real economic activity.
Furthermore, Celsius have allowed the public to participate in both their ICO offering and the Equity offering making the business truly customer owned and focused. Now, when the average joe investor (sorry Joe, you are awesome) takes part in accretive deals like this, then they will eventually have a bigger pool of disposable income which they can spend more from to spur economic activity.
Going forward, you could replicate what Celsius did and allow holders of capital who are thinking about building new products and services to market their product/service to potential customers who could then buy some equity in the firm because they think the company will do well and also because the potential customers would like to use their products/services.
Doing this would allow the creator of the product/service to have:
1) Extra funding to start/grow the business
2) Customers who are validating your idea
3) An initial customer base who are incentivised to help the company grow (network effects)
The capital raise doesn’t have to be the seed round, it could even be for later rounds like the Serie A round, which is probably safer for the average joe to participate in since newly launched businesses rarely get enough traction to survive.
However, there is a problem, how is the average joe supposed to spot a good early stage business investment? It’s tricky for those who lack education around these topics and it is still pretty tricky even for professionals who do this day in day out.
Now here lies a potential solution… Decentalized funding systems built on Cardano.
Let’s say people buy a small stake in Cardano. Now what this decentralised funding system does is encourage participation to review and fund potential business ideas that can create value for the holders of the coin (make number go up).
A properly built system that encourages people to fund the best proposals that create value for the coin holders is what I call collaborative capitalism. Where not only the equity holders of the business creators benefit, but also those who participate in helping review proposals and those that hold ADA.
Pretty simple solution to solve a big problem… Could it really be that simple?