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Modern Economical Nonsense – Participatory Economy

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DAO or Decentralized Autonomous Organization is a new trend that Web3 companies may adopt to run their business in the future. There is a viable part that is missing from the discussion – participants. The technology has been developed and continues to improve. However, the essential part of the discussion is how to cultivate participants. Eventually, you are building a community rather than a corporation to keep people interacting in Web3.

Let’s explore. 

Table of Content

Web3 Creators’ Economy

Participatory Economy

Category

Incentivized Participation

Bot Selection vs. Human Selection

Redesign Motivation

In Conclusion

Web3 Creators’ Economy

What we have learned from Web2 makes us think about what we should do to avoid the failures from Web2 and improve through Web3. We were creating a digital monopoly in Web2 with few corporations controlling data and information that bring society’s attention only to what they want you to focus on. A very similar operation under totalitarianism except they are only profit-driven corporations. 

They are centralized and dictatorial and require complete subservience to their users through newly invented technology. Such technology blinds you to only see what they want you to see and influence what they want you to believe. 

Web3 is liberation from Web2 which claims you take control of your data and from the internet. It is a truly decentralized, peer-to-peer network that people freely anticipate without third-party interference.

The problem with Web3 is we are missing participants!

Participatory Economy

Maybe this isn’t so obvious but the creators’ economy relies on a participatory economy. 

From Robin Hahnel’s argument, economic planning does not require a central authority. It is impossible for a central authority to accurately make decisions as they require all information to be ready while new information continues feeding so that when they make such decisions, the information may impact the outcome of the decision they made.

So we have to plan as we go and the more participants join, the more accurate economic planning can be reflected. 

This idea is a key idea to the creators’ economy and DAO that drives Web3 successfully in the long term.

Category

You are aware of the government’s struggle to regulate cryptocurrencies. It is not their fault to categorize what cryptocurrencies were or lack of understanding. The structure of the economy was created in a backward fashion.

Here is the old-fashioned to run an economy:

First, you determine what it is

Second, you put it into such category and use the existing framework to fit into such category

Third, you monitor and track in case something happens that may be out of their control, they will step in to fix it

This way is similar to having a central authority plan out the economical targets and letting everyone participate. Of course, this way will always fail because more information feeds into the system and central authorities need to keep up their pace to monitor and track more spending budgets to do so. However, you cannot have an infinity of resources just to track economic activities. So they simplify in a lazy way, to average out through a national level. The problem is when you average out something, you are missing out on the accuracy to reflect reality.

The government is struggling to come up with solutions to cryptocurrencies and the current economy is struggling to fix previous mistakes.

Let’s change the mindset and dive into a participatory economy:

Here are 3 steps in the participatory economy to categorize goods and services:

First, product development and the principles of categorization of products 

Second, the final design of products and services 

Third, the production process and technology

You simply categorize products by their functionality first. Then you are working along the way to finalize the design of such products and layout their process.

The key is to work along the way to improve your products and your data at the same time improve your process with more data.

However, we still have a problem with participation.

Incentivized Participation

mage credit: https://arxiv.org/pdf/1904.07310.pdf

When you enter into DAO, usually there are 4 areas you will participate in: contributing, earning, voting, and becoming a witness. 

Those 4 areas of activities are very similar to Steem Blockchain where you post articles to earn cryptocurrencies.

Contributing: from the Steemit, you may post or upvote articles. In DAO, you perform certain tasks that contribute to the community. Such tasks may not limit to content creation.

Earning: your article can provide earnings from the Steemit, however, you may need to perform tasks to meet certain requirements from the DAO.

Voting: from the Steemit, you will be elected to vote, rather than in DAO, you will have voting power through possessions of voting tokens. Those tokens you are either earning from your tasks or a reward from other events.

Becoming a witness: in Steemit, to become a witness, you have a right to change the platform. In a similar idea, to become a witness in DAO, you become a core member who can write a proposal to change DAO’s operations. 

Image credit: https://arxiv.org/pdf/1904.07310.pdf

In general, the more senior you are, the more likely you are to contribute more and participate more in the DAO.

Bot Selection vs. Human Selection

To keep your community alive, you need to have a fair system to reward your members based on their amount of contributions. In the meantime, you need to create mobility to help new members to become senior members while creating an exit plan for senior members to step down or transition into other roles.

Image credit: https://arxiv.org/pdf/1904.07310.pdf

In the past DAO community, the platform utilized bots to encourage users. It creates a biased selection that few become a whale which leaves many behind. 

Worse, the bots dominated the system by buying out the tokens from large stakeholders and selling the voting powers to users who want to promote posts.

Image credit: https://arxiv.org/pdf/1904.07310.pdf

The ecosystem then becomes unfair and unbalanced.

Redesign Motivation

To run a Web3 community, you need to conquer 3 factors:

First, distributed power

Second, design model away from exploitation and extraction

Third, building a community trust

The goal is to create a community that shares prosperity, justice, and equity.

In Conclusion

A participatory economy is a new way to solve an old problem. It requires more participants to join and figure out the figure.

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Crypto Research

Bitcoin is not dead yet

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Bitcoin is not dead. In fact, the value of Bitcoin has increased in the past few months, and this is because of a lot of positive attention that Bitcoin has received. Many people are still interested in using virtual currencies to store their money. However, for these people who have been long-time Bitcoin users, the demand for Bitcoin has grown as the price has increased. If this assumption is valid, most people who plan to buy bitcoin will need to have a good reason for doing so. What if this assumption is no valid?

What is a cryptocurrency?

A cryptocurrency is a digital currency that has no primary functionalities other than being able to be stored online and exchanged for various other cryptocurrencies. Some of the most popular cryptocurrencies currently are Bitcoin, Ethereum, and many others.

Why to buy Bitcoin

There are numerous reasons to buy Bitcoin, but the most important one is to diversify one’s investments. If you are mainly investing in Bitcoin and other cryptocurrencies, then you will definitely want to buy more of them in the future. However, if you are trying to diversify your investment and purchase other cryptocurrencies, then you should start with the oldest and most successful ones. Additionally, individuals who hold positions in various financial products like stocks or bonds may also want to purchase Bitcoin. This is not a recommended move, however, as volatility in the market makes it difficult to know what will happen next. But when the economy will have a long recovery time, buying Bitcoin is not a wise move since it may take even longer for Bitcoin to recover its price.

Why not to buy Bitcoin

There are a number of reasons not to buy Bitcoin when the economy is bad. One of the top reasons is because you do not know where to start. There are many online retailers that sell everything from computer hardware to electronics, but you will probably never go that route since FTX is a prime example to let loss of trust on the exchange service. Another reason not to buy Bitcoin when the economy is bad is security. The amount of money and time to spend of securing Bitcoin is considerable. It is also likely that many criminals will target people who have money stored in a self-custody wallet.

Conclusion

The demand for Bitcoin has grown over time as more people adopt the digital currency as a store of security and money if that is the case. As more people adopt the currency, the value of Bitcoin has increased. This growth is likely due to many reasons, including the fact that many people now want to use the currency as a store of security and money. Although cryptocurrency has seen rapid growth over the past few years, it does not guarantee it will grow in the future. The demand for cryptocurrency will likely decrease in the future if people realize that it does not have any primary functionalities other than being a cryptocurrency itself.

Of course, this is no financial advice.

Photo by Silvestri Matteo on Unsplash

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Crypto Research

Invest NFT is a very bad idea

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You’re probably thinking, “but why would I ever want to deal with non fungible tokens or NFTs?” Well, that’s because there are a couple of very practical reasons why you shouldn’t. Firstly, non fungible tokens are not very good for your long-term investment. Let’s take an example. You have just purchased a 5 million worth of NFTs from Coinbase. Your long-term investment is protected for the next three years — barring some catastrophic event? But even if you manage to maintain your long-term investment for the next three years, imagine what will happen once you hit five of those years! Without a doubt, these problems increase exponentially when you have a bear market — how much can you keep NFT value? It’s quite likely that you will be broke. 

What is a non fungible token?

A non fungible token is an crypto that is not from a recognized blockchain like Ethereum. After being offered for purchase, these tokens can be easily bought and sold on any exchanges you would think. However, they are extremely liquidated and hard to sell.

Proper use of tokens

When you want to buy or sell a single NFT, you can always purchase it with other cryptos. However, NFT is just a symbol of owning something that is … useless…

Fees and charges on transactions

A transaction fee is charged when you make a payment with a cryptocurrency exchange. You can choose to pay this fee in fiat cash or a payment service like Coinbase’s Wallet.com. The transaction fee is a percentage of the amount of money you have just transferred. You can pay this fee in exchange for having access to the market for that particular crypto exchange. Some exchanges will charge you a trading fee in addition to the transaction fee. This is mainly to help cover their fees. 

What happens if we try to sell NFTs?

Creators will benefit from each transaction. That is all. Unless there are exclusive perks that follow of owning NFTs, there are no much value that you want to possess them. 

Conclusion

NFTs are not as what we expected them to be.

Photo by Ashley Jurius on Unsplash

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Crypto Research

When crypto bank is a shadow bank

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If your business goes bust, what will you do? You’ll probably need a fresh start. Fortunately, that can be a lot easier than you think. But that is not easy for a shadow bank, particularly the crypto shadow bank. Let’s explore what to do when your shadow bank goes bankrupt.

What’s the profit in being insolvent?

When your business is profitable and has plenty of cash in the bank, you can either pay your debts or use the profits from your sales to repay your creditors. If you’re able to meet your debts, you can then use the profits from your sales to pay your creditors. In some cases, you can even try to access your assets to pay your creditors. However, crypto shadow bank has illiquidity assets that unlikely can exchange to cash and pay off the debt. They are likely to go bankrupt with cash on hand and forced to sell their illiquid assets later to pay off debts.

Residual income or loss?

In general, if you’re able to show that you have a profit in being insolvent, it’s a good sign that the other parties in your business have their ear. If they haven’t, they could become targets. If you can show that you have a surplus, that is money left over from one period of activity when you were profitable and unable to pay your bills, you could be able to get your debts forgiven or pay them in full. For example, if your sales this past month were $1,000 and the total amount saved was $400, your surplus could be $100. If you can’t show this, you may have to start again from scratch. Unlike crypto shadow banks, they made huge profits when the market rose but lost quickly when the market went down. When the market goes down, they are less likely to get more funds since investors lost their appetite on the crypto.

What to do if you’re insolvent and no one will pay your bills

If you can’t show that you have a profit in being insolvent, you usually have three choices. You could either pay your bills or try to get a loan to avoid bankruptcy. You may also be able to get a special interest group on your local real estate board to readize you and make any required property inventory. You can also call a mortgage broker and arrange to buy a home.

But if you are running a crypto shadow bank, you cannot sell crypto because the market goes down faster to preserve your asset price. You cannot get another loan because likely you have highly leveraged your previous loans with high risky assets.

Get a loan to avoid bankruptcy

If you can’t pay your bills, you might be able to get a loan to make repayments on your credit cards or other debts. However, this shouldn’t be your only source of cash. For example, if you have a net worth of $5 million and your debt is $1 million, you could borrow $500,000 and have it repayments in as little as a month. Again, this is a very low-risk way to make payments.

But in crypto shadow bank, that is no an option for you.

Make payments on time

If you’re able to show that you have a surplus, you can try to pay your debts in a timely fashion. For example, if your debt is $500 and you owe $100, you could pay the full amount in a few weeks, or you could wait a month and then pay the rest. This is a low-risk way to make payments.

In the crypto shadow bank business, you cannot make payments on time and will likely go bankrupt soon.

Try private loans

You can go ask private loans with high-interest payments for the short term to offset your losses. This is not an option for crypto shadow bank again, they have already possessed high risky private loans.

Conclusion

Small businesses can weather uncertainty but no crypto shadow banks, which is why many crypto lending services keep collapsing.

Photo by Martino Pietropoli on Unsplash

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