Let’s skip the technobabble and talk about how blockchain will impact the wallets of you, me and maybe even your mom.
WTF is blockchain, really?
We’ve been bombarded with decentralization this, and trustlessness that, but really…why should the Average Joe give a #$%??
So let’s start with what blockchain actually does:
Blockchain VERIFIES individual contributions, and in some cases, DISTRIBUTES VALUE to these contributors.
A glorified ledger that tracks stuff. Cool. But let’s be honest with ourselves, this sounds like gibberish to most people, especially our parents.
What does this actually mean for the Average Joe?
Blockchain will provide a way for people (and things) to be compensated for ALL types of contributions: big or small, work or leisure. Your previously INVALUABLE skills, knowledge, creativity and time…now have VALUE.
To understand how we get there, let’s revisit history.
Internet = “Information Superhighway”
Back when Kurt Cobain, Tupac and Biggie were still alive, the Average Joe described the Internet as the “Information Superhighway.” A cheesy phrase if you ask me, but still better than Hypertext Transfer Protocol.
Like blockchain, the Internet means different things to different people.
At its core, however, it solved a major problem from the Real World. It’s cumbersome and expensive to share information in the Analog world, especially around the globe. The “Information Superhighway” solved this by providing instant global distribution of digital information. These new capabilities have ushered in a period of unprecedented new value creation.
But, where the F did all the value (aka money) go?!?
Today’s challenges with “Value”
How does one determine the “value” of an item or activity?
It’s a difficult and rather esoteric exercise, so the tendency is to valuate based off either initial inputs (e.g. time spent) or final outputs (e.g. product), ignoring most everything in between.
Outdated compensation models
Today’s organizations are incredibly reliant on the cooperation and contributions of its employees. So it’s mind-blowing that companies still compensate their employees using Industrial Era models that haven’t changed in 100+ years: hourly wages, salaries based on attendance, and flat rates based on time spent.
Input, time-based compensation is woefully inefficient for compensating productive work in today’s modern economy. Even worse, it undervalues important contributions such as leadership, mentorship and cooperation.
On the other end of the valuation challenge, you have many stakeholders and contributors who are “left out in the cold.” For example, consider that the vast majority of Facebook’s content is provided by consumers and small business partners. Yet, these contributors are often under-compensated or not compensated at all. The collective value from their contributions is instead held by the Facebook corporation that owns the final product and its associated digital info.
Whether one is valuating contributions based on initial inputs or final outputs, both methods rely on a centralized player to determine and distribute compensation.
A centralized entity that determines how much your time is worth.
A centralized entity that owns the final product, all of its associated info, and much of its accrued value…and has the exclusive choice to distribute value to you (or not) as it sees fit.
To put it more plainly, just imagine you had a boss like Michael Scott deciding the value of all your work contributions…
Distributin’ ain’t easy
What about the centralized entities who do want to compensate their contributors?
$30+ billion Airbnb and $60+ billion Uber have publicly acknowledged the crucial role of their sharing economy contributors:
“We believe that enabling private companies to grant [sharing economy participants] equity in the company from an earlier stage would further align incentives between such companies and their sharing economy participants to the benefit of both.”
But as the Juno case illustrated, good intentions may not be enough to overcome the significant hurdles in distributing “value” to contributors. Today’s regulatory frameworks and liquidity options are simply not designed for free-flowing distribution of “value.”