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 this, and that, but really…why should the Average Joe give a #$%?? decentralization trustlessness So let’s start with what blockchain actually does: Blockchain individual contributions, and in some cases, to these contributors. VERIFIES DISTRIBUTES VALUE A glorified ledger that tracks . Cool. But let’s be honest with ourselves, this sounds like gibberish to most people, especially our parents. stuff What does this for the Average Joe? actually mean 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. Fancy shmancy. 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 A cheesy phrase if you ask me, but still better than “Information Superhighway.” 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 “ solved this by providing instant global distribution of digital information. These new capabilities have ushered in a period of unprecedented new value creation. Information Superhighway” But, where the F did all the value (aka money) go?!? The Internet, aka “ provides instant global distribution of digital info Information Superhighway,” 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, cash flow), 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 Outdated compensation models Today’s organizations are incredibly reliant on the cooperation and contributions of its employees.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. Ignored contributors 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. Concentrated control 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 is worth. your time A centralized entity that owns the final product, all of its associated info, and much of its accrued value…and has the to distribute value to you (or not) as it sees fit. exclusive choice To put it more plainly, just imagine you had a boss like Michael Scott deciding the value of all your work contributions… Valuating your work like it’s 1918 Distributin’ ain’t easy What about the centralized entities who ? do want to compensate their contributors $30+ billion Airbnb and $60+ billion Uber have the crucial role of their sharing economy contributors: publicly acknowledged “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 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.” Juno case Blockchain = more precise, less biased valuations Bitcoin’s appropriately named consensus model, in a nutshell, is a transparent way to verify one’s work contributions. proof of work Art and science…but more science By using math to directly verify work contributions, Bitcoin and other blockchains are able to pinpoint the “value” of an individual’s contribution from the larger haystack. Think of it like MRI scans for valuations. Direct and precise verification lays the groundwork for new valuation models that will be magnitudes better than previous models that relied on indirect and imprecise inputs and outputs. As consensus and valuation models improve, I’d expect an exponential growth in the number of activities and contributions that will be efficiently compensated. Gatekeepers not required A transparent verification process means anyone around the world . This makes it that much more difficult for a misbehaving gatekeeper (like Michael Scott) to suppress, ignore or manipulate the “value” of your contributions. can see where the value is coming from Transparency combined with well-designed incentives (aka value distribution) means we can avoid the altogether. centralized Leviathan Blockchain = wider, more aligned distribution Besides giving us the warm fuzzies, why should we care about distributing “value” to contributors? Because incentives drive us. When “value” is offered as an incentive, humans will literally move mountains. Case in point: Silicon Valley. Mo Distribution, Mo Value When asked about Silicon Valley’s greatest innovation, iconic products typically come to mind: the personal computer, smart phones, social networks, etc. But perhaps Silicon Valley’s greatest innovation isn’t technological, rather, it’s behavioral, in the form of employee stock options. Let me explain. Valley tech companies the distribution of company equity to employees, essentially transforming these employees into mini-owners. These employees were then incentivized to grow their individual wealth by aligning their work activities with the interests of the larger company. Today, tech companies’ dominance of the stock market and our everyday lives highlights the effectiveness of using value distribution to align groups of people. pioneered The from Silicon Valley is that “value” is NOT a . insight zero-sum game The whole is greater than the sum of its parts. The for blockchain is that value distribution incentivizes the group alignment that creates even more “value.” The wider the value distribution, the greater the group alignment, the more net “value” is generated. lesson Employee stock options democratized ownership of company “value” from a few founders to thousands of employees. Blockchain takes this democratization to a whole new level to include MILLIONS, perhaps even BILLIONS of consumers, partners and other contributors. Blockchain = “Value Superhighway” Tying together better valuation models with wider distribution give us the conditions for blockchain to be a superhighway for in the same way the Internet was a superhighway for . value, information Blockchain, aka “ provides instant global distribution of digital value Value Superhighway,” The Internet solved a major problem of the Analog World by digitizing stuff and distributing it everywhere. However, the Internet still sucks at distributing value. Blockchain solves this problem by valuating stuff and distributing it everywhere. Just as the Internet was built off the lessons and infrastructure of the Analog World, so will blockchain build off the lessons and infrastructure of the Internet. How will this affect my wallet? Multiple income streams FTW Consider the many different work activities you perform for your job today. Now think about the many different leisure activities you enjoy. What if you could be compensated for each of these work and leisure activities? In fact, there already are several blockchain solutions that compensate you for activities such as , the web, , and even . answering surveys browsing online shopping watching TV Now, not every activity can or should be compensated via blockchain. But just as the Internet enabled completely new ways to make money (did anyone predict social media managers?), blockchain will do the same. So the bigger question is how such a future will affect you, your family, friends and colleagues? Would having multiple income streams change your attitude towards your 9-to-5 job? How would you allocate your free time? How would you differentiate between Work and Play if you’re getting compensated for both? The Long Road Ahead Construction on Route 66 The Internet, aka “Information Superhighway,” required decades of iteration on products, ecosystems and business models to arrive at an efficient global network for information. Likewise, for blockchain, aka “Value Superhighway,” much work remains on what is today, just a dirt trail. This is a multi-decade journey that will require patience as the industry proceeds . But the underlying ingredients are incredibly promising: one bite at a time Thanks to improved valuations and better aligned distribution on the “Value Superhighway,” blockchain will have a major impact on how we organize, work and play. In future posts, I’ll explore in more detail how blockchain will touch our daily lives, as well as dive into the building blocks of the “Value Superhighway.” Progress never proceeds in a straight line — there will certainly be plenty of detours, dead-ends and accidents along the way. My hat goes off to all the entrepreneurs, investors, regulators, academics, and most of all — the contributors, who are paving the road for others to follow. I’m just happy to go along for the ride. Like what you read? If so, please hold the clap button to clap away! Follow to be notified of future posts. Thanks to Luke Xie , Matthieu Courtin , Ed Wu , Jim Breese and Rajiv Pardiwala for their invaluable feedback.

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