- Cryptocurrencies will allow us to invest, own and profit on intellectual property rights of music, books, movies, patents and create a stock like exchange where we will be able to trade them.
- Anything of value that can be digitized, will be digitized and will become a potential investment with liquid ownership.
- Capitalism is the economic model native to the industrial age and physical assets. Valsharism the native economic model of the information age and digital assets.
See how it’s going to work
Valsharism, from “value” and “share”, is a neologism to describe a new economic model based on fluid ownership and the premise that everything of value that can be shared, monetized or transformed on a investment vehicle, will be.
Until recently, the protocols necessary to unlock a massive and decentralized use did not exist. Cryptocurrencies have provided the missing piece to unlock the birth of this new economic model.
Capitalism is the economic model native to the industrial age and physical assets.
It’s based on the private ownership of the means of production and their operation for profit. In Capitalism, the cycle works this way, you get money (capital) , build a factory, create a product, sell it, and use the earnings to re-invest in your factory to build more products.
This is the model of GE, Ford, Zara, etc.
Fast forward to the information age:
The Information Age (also known as the Computer Age, Digital Age) is a period in human history characterized by the shift from traditional industry that the Industrial Revolution brought through industrialization, to an economy based on information computerization.
Google, Facebook, Twitter are the GE, Ford, Zara of the information age. So how the Wikipedia definition of capitalism fits their business model?.
Let’s analize Twitter.
Twitter = You can use this to type 140 characters
Twitter doesn’t really sell a product. And although capital is necessary to scale Twitter as it succeeds, you don’t need a huge amount of capital to make a Twitter clone.
So if it’s not the capital what’s needed to create it, or the goods it creates, what gives Twitter a 12.25 billion valuation?.
What is the economic model for the information age?
Even when there is a constant struggle to find and try different models of monetization, there is a consensus on what gives the value on a platform or network - most of them look like stupid ideas until they have users.
The value of the network is created by:
- Number of users
- Interactions of the users
- Value moving on each interaction
We can make a basic formula :
Network Value = Number of users X (Interactions of user X Value of each interaction)
Where the value of each interaction is defined by the nature of the network or platform and it’s not necessarily monetary value:
Some examples of value moving on each network/platform:
Google: Information needs
Facebook : Social connection
Twitter : Short expresion/info
Whatsapp : Communication
Those are networks/platforms that manage intangible value: is difficult to put a monetary value to the feeling of social connection, thoughts expression or information discovery , even when those are highly valuable for us, then monetization strategies are needed to exchange intangible value to tangible (Ads, subscriptions, sell goods, etc).
There are networks/platforms where the value of the interaction are more tangible because there are concrete values traded on them:
Airbnb : Lodging
Some of the most successful companies on the information age share the following model:
Services or networks that capture value from the interaction of his users and find a way to monetize that value.
The companies that have successfully accomplished this have become the current unicorns.
Digitized -> Demonetized -> Democratized
Capitalism captures value materialized in products and services using capital as a tool. In the information age, successful companies capture value by digitizing intangible and tangible value using networks as a tool.
So far, companies that create the infraestructure to capture the value become huge silos of value.
In the capitalist economy you can see an example of that in the media business, where newspapers and TV stations capture so much value that they became known as “the fourth estate”
With the advent of the information age - and more specifically of the digital era - even those huge and powerfull forces can’t fight this peculiar cycle :
Digitized -> Demonetized -> Democratized
You need a million dollar press (capital) to run a newspaper, but when media get’s digitized, it get demonetized, entry barriers no longer exist and get’s democratized.
Newspapers get competition from bloggers or anyone who want to be heard.
TV Networks get competition from Youtubers.
Radio shows from Podcasters.
It’s easy to see how this cycle has impacted traditional industries, but this cycle has not yet finished impacting the digital native industries.
Huge value silos, or walled gardens, have not yet been impacted by the last step of the cycle, democratization.
Valsharism the native economic model of the information age and digital assets.
The philosophical roots of “sharing value” already exists , most of the technological infrastructure that you use everyday is a product of this, Android, Linux, the Opensource movement, Wikipedia, Creative Commons. All of them are based on openness and value sharing. Some incentives are: desire to learn, be a part of a community of like-minded, reputational effects. Not money.
Valsharism as an economic model basically is the democratization and distribution of value with economics incentives through fluid ownership.
Anything of value that can be digitized, will be digitized. Any value that can generate more value will become a potential investment, any ownership that can be shared and made liquid will be made liquid. Network effects will emerge not only between people, but between digital values.
The catalyst element that will unlock this is a relatively new invention: cryptocurrencies.
Let’s see how it might work in the real world:
Bruno MarKs, a famous singer, is going to release a new single “Good to you” . All previous singles have all been hits on the billboard, so everyone is waiting for his next song. Due to various problems with his record company, Bruno will release his next single under the new economic model of shared ownership with is fans and the market.
Even when the music is already digitalized, he will also release the ownership of the song as a digital asset in the form of a cryptocurrency. If you are not aware of what criptocurrencies or tokens are, you can see them as a digital stock issue. In this case the intellectual property (IP) of the music will be tied to the token and those tokens can be divisible in fractions and traded on the market.
Based on previous songs, the estimated revenue for a successful hit will be from 500k to 2m on royalties for the first year , so he plays on the conservative side to make the offer attractive and release a crypto token emission for his song with the name BRN-GOOD, and a emission of 1,000,000 tokens with a value of $1 each, meaning that he assigned a value of $1,000,000 to the song.
He keeps 400,000 BRN-GOOD tokens for himself. He put 400,000 on the market to pay for the production, and uses 200,000 as an incentive to radio stations for promotion of the single.
Every BRN-GOOD token holder is entitled to a proportional revenue generated by the song that will be distributed automatically to all token holders each trimester.
As part of the “aditional perks” that comes with the token emission , buyers of the token can use it to buy the song on digital format, concerts tickets for the next 18 months , or merchandising related to the song , all with a 10% discount from regular price.
BRN-GOOD buyers might want the token for the following reasons:
- They are fans of Bruno MarKs and want to support his work giving directly to the artist. (like Kickstarter)
- They speculate that the single will be a classic and will receive dividends from the royalties collected for many years. (like shares)
- They want to use the “aditional perks” that come attached to the ownership of the token.
- They speculate that the value of the currency will rises by the demand.
Why can there be a demand for the token?
Today radio stations have to pay a base fee or a “per play” fee to music royalties managers every time a song plays. But by holding tokens from a particular song , they can recovery those costs, and receive the royalties for the song from other radio stations that does not have the token.
The Valsharism economy model can redefine stream revenues from radio stations as they become more like “fund managers” of IP tokens. Instead of being an operative expense, songs will be an investing asset.
New artist can make deals for current or future tokens of their songs with radio stations that will “invest” on promoting new artist, knowing that will benefit directly the valuation and royalties revenues of their tokens.
Regional music ecosystems can flourish thanks to the economic incentive on being the first on launch new artist’s tokens, and by the shared interest on the token valuation, holdings of local radios can work together to promote local “coined” art.
Metcalfe law will start to work on assets.
New, unknown opportunities and jobs will arise from the value shared economy. From IP exchanges to token bundle makers, tokenized law firms, and more.
This already exist, it’s called company shares.
Are you talking about ICOs for everything?
Aren’t all ICOs the current scams d’jour?.
We will dive on to those questions and how Valsharism might impact every role on the current economy in the next part of this post.