Economics of BlockchainA Circular Economy in the Age of Network Finance and Social Capital

Business before Blockchain !A Survey of Contemporary Economy !

Labor Contracts are Bilateral and Abstract !

Most work today is compensated via bilateral agreements between a worker and an employer according to a simple contract: you work in X job, and we will compensate you in Y currency.

Blockchain RevolutionIt basically enables a global spreadsheet — an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value and importance to humankind:

birth and death certificates, marriage licenses, deeds and titles of ownership, educational degrees, financial accounts, medical procedures, insurance claims, votes, transactions between smart objects, and anything else that can be expressed in code

Alex and Don Tapscott

Blockchain is a Trust Machine !Economist, October 31st, 2015

Economic Dimensions of Blockchain

In essence it is a shared, trusted, public ledger that everyone can inspect, but which no single user controls.

The participants in a blockchain system collectively keep the ledger up to date: it can be amended only according to strict rules and by general agreement.

Santander reckons that it could save banks up to $20 billion a year by 2022

Blockchain TechnologyA few business cases

Low cost Tamper Proof Land Registries

Honduras and Greece are interested

Bitland in Ghana

Chromaway in Sweden

Registers of ownership of luxury goods or works of art

Everledger for Diamond

Petrodvorets for its luxury watches

Documents can be notarizedIn Spain, certifying a document costs on average 250€..Thanks to the blockchain, any kind of data can be certified for as low as 0,2€—

It’s a 99,9% cost cut compared to a legacy notary, and that is for a certificate that is as legally binding as the one from a ‘brick-and-mortar’ notary.

Blockchain Circular EconomyDefining the Context and a Survey of Usecases

Defining Circular Economy

“A circular economy is one that is restorative and regenerative by design, and which aims to keep products, components and materials at their highest utility and value at all times, distinguishing between technical and biological cycles.”

Criteria for Circular Economy

At the heart of making this possible, is the relationship between actual work done, value created, and value received.

The work being done must be varied

The work being done must be valuable and valued

Users should be able to spend their earned currency internally in order to generate more value.

Context of Circular EconomyEither the Circular Economy or the Access Economy are fairly recent emerging concepts. They are considered by many to be a more appropriate expression of the larger concept of “Sharing Economy”.

The foundations behind the idea of access rather than sharing are the fact that people get access to goods and services through using various technologies, apps, and websites.

This is considered by some to be more worthwhile than actually owning these assets as a community or a sound P2P. Another interesting characteristic of this novel models is sustainability.

Stages in a Circular EconomyUsers perform some work, either passive (driving and sharing data), or active (voting a post, or making a decision).

Each marketplace has its own 'unit of work', consisting of a variety of activities.

Each unit of work generates value for the marketplace, for other users and for the end-user themselves. This is an expansion of the network effect theory

In return for that value, users are rewarded with a native token currency, the marketplace’s own currency.

That currency can be spent inside the marketplace on another transaction or service (eg taking a ride, promoting content), or it can be exchanged outside the marketplace against another cryptocurrency or fiat money.

The value of the marketplace as a whole increases proportionally with the amount of activity & value that are generated inside of it.

Potentials of Circular Economy

McKinsey estimates shifting towards the circular economy could add $1 trillion to the global economy by 2025 and create 100,000 new jobs within the next five years.

Content Economy

Steemit for example, rewards users who vote-up or write posts on its decentralized content platform.

Behavioral Finance

The theory of decentralized transportation platform La’Zooz is that you earn Zooz points, just by driving your car while the app collects data about your driving patterns.

Healthcare Insights and Blockchain

A healthcare research entity could pay patients or normal people who share their medical data, in exchange for the collective wisdom that is gained by aggregating that information, and returning personalized or comparative insights.

A Blockchain-Based Circular Economy Market Place

The blockchain will enable us to do our jobs and be compensated inside new circular economies that have their own currency units and their own work units

The influential new tech business author and evangelist William Mougayar, the author of “The Business Blockchain”, and a board advisor to the Ethereum Foundation.

This is one of the critical areas of the P2P, crowd sourced and crowd based and sharing economy weaknesses: how to reward people in a cashless increasingly machine driven world.