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The main use case for blockchain is as a financial instrument to represent shares in a community's economy. A community economy is like a national economy excep
by cryptica 7y ago
The main use case for blockchain is as a financial instrument to represent shares in a community's economy. A community economy is like a national economy except that the value of its currency does not rely on the coercive legal powers of a government. Aside from that, it functions exactly like any normal economy; if participants in this economy (token holders) export more services than they import, then their cryptocurrency's total value (market cap) will go up relative to other national currencies.
I think cryptocurrency is the best use case for blockchain technology. It is a very narrow use case but an extremely important one. It gives a group of people access to powerful financial tools that are otherwise completely out of reach for regular people.
The idea that communities can have their own micro-economies is going to be radical and completely change how we do business.
One specific use case which I've identified is the ability to use a cryptocurrency to represent shares in a business. It offers small businesses powerful financial tools which are not available to normal businesses of that size. For example, you can use business profits to do token buybacks (which are like share buyback which corporations use); with decentralized exchanges, it's even possible to do buybacks without relying on any intermediaries (e.g. no accountants or brokers). Token buybacks are a simpler alternative to distributing dividends to shareholders. Token buybacks (and subsequent burning of bought tokens) allow a company to pay shareholders through capital appreciation by diluting the cryptocurrency's total supply; this gives small businesses access to the same financial tools which big corporations use to reduce their shareholders' tax liability among other things (capital gains are typically taxed much lower than income and only paid when they are realized; I.e. when tokens are sold). Also, having a tradable cryptocurrency gives a business exposure to influential outsiders (e.g. journalists, wealthy investors, politicians) who have an incentive to participate in the underlying small business and then use their influence to help grow that business and its cryptocurrency. 'Airdrops' can also be carried out in highly targeted ways to create a favorable economic and political environment for the business.
With cryptocurrency it's also possible to pay contributors (employees) using the token instead of fiat. It also helps make sure that contributors' incentives are aligned with all other stakeholders. I'm currently part of a business which works like this. We have 7 contributors and everyone has only been paid using crypto for the past few months. We have a buyback-and-burn deflationary mechanism in place so everyone knows that each token is (on average) guaranteed to always go up in value. You can also pay for marketing and other services using the token - I was quite surprised by how many people were willing accept our cryptocurrency in exchange for services; it feels like the majority of people.
- louwrentius 7y agoThanks for your effort to reply. But I'm sorry: I'm not really convinced. > does not rely on the coercive legal powers of a government It's always this extremely paranoid negative view on governments that seem to fuel support for blockchain. Obviously, there are some 'bad' environment, but if your mistrust of government is that bad, no blockchain is going to fix your problems. I could be mistaken myself but I think a lot of people may on a fundamental level misunderstand how trust plays a role in our societies.