Automating Consensus to reach Stakeholder Symbiosis

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How Blockchain technology can be used to prevent conflicts of interests Part 4 of 5 - Consensus IS Power series

Quick recap of previous parts

Let’s start with what we’ve gone through so far:

Part 1 - The purpose of Blockchain is to disintermediate economic networks

To replace existing intermediary entities with better, or less harmful, versions of themselves, and return that value to end-Users

Part 2 - Decentralization & Centralization are not respectively "good" & "bad"

The real issue is not centralization, but rather, it is conflicts of interests.

Part 3 - Recent innovations have introduced new functionalities in basic components of broad economic networks

Specifically, the ability to ensure trustless transactions (blockchains) and to ensure enforcement of future events (smart contracts).

And now it’s finally time to get to the central claim of this series: 

Consensus is at the core of it all

You were promised opportunity, the “future” of economics and a better world overall. But it’s 2020, and we’re all used to everyone being full of shit.

So you’ve probably been wondering if the technologies that were introduced actually do provide the tools to fulfill the promises made.
We believe the answer can still be “yes”.

 

But what is missing is consensus – a common agreement on how these new financial institutions should be organized, by who & to what purpose.

Ask yourself: who should “true” decentralization come from?

The masses of consumers in the crypto industry expect successful business organizations, the big players in the market, to deliver upon the underlying promise of decentralization. It’s easy to assume the “experts” have the best chance of succeeding. So what’s keeping them?

Conflicting interests

You must understand that, inherently, any organization that is both:

a) already successful

b) has shareholders

Will inherently work against what you think is a shared goal, because it goes against the basic profit motives by which it is bound to as a business.

 

In fact, it is the very fact that they have already distributed their equity to their team and shareholders that prevents the alignment of the interests of the business and of its consumers. 

 

For-profits are bound to the interests of their investors and it would be illegal for a middleman business, in most cases at least, to pursue their own disintermediation without the express consensus of the majority of shareholders, for they’ve everything to lose. Besides, good luck convincing them to give up a legitimate claim on an existing and successful business.

It's never gonna happen like that

After all, starting a business is a gigantic amount of work, involving high risk for anyone involved in its early stages, and growing it into a successful & sustainable operation is even harder.

 

Why should founders & investors share the fruits of their labor with the users anyway? They’re the ones who take all the risk.

Nevertheless, the result of this situation is conflicting interests, because everyone involved is pursuing the goal of maximizing their own profit, and clearly owners draw value from the activity of consumers: the less value they can afford to pass on to consumers while still remaining competitive in the market, the more they get to keep themselves. 

 

The more consumers need the product, the more they’ll pay for it, and so on. Ultimately the result is control, big businesses owning the consumer.

But this alleged tendency towards balance is just a fable, a utopic wish, a complete lie. And an “open secret”.

 

We all know the truth: new entries never stood a chance against the colossi of each and any industry – the best one could hope for was to become a problem for the big fish, and then sell out for a ton of cash.

Thanks to blockchains, we can put up a real fight

In practical terms, conflicts of interests such as those we describe, can’t really be fixed once they arise. But now we have the tools to prevent them.

 

“Consensus” means “agreement by a majority of those involved”, and as hopefully we’ve hammered into your mind enough, it is the key to it all.  

Life reminds every day of just how difficult it is for humanity to agree on anything, and even more so, how difficult it is to preserve consensus if and when it is actually achieved.

 

Further, everything depends on it, from our personal relations to the appointment of world leaders, and of course, it’s required to start and sustain any commercially viable business.

Businesses are many and varied, but all share common aspects. For any commercially viable endeavor, you will need the following, in this order:

 

  1. Market fit. An audience that demonstrably wants your product over those of competitors.

  2. Profitable business model. To source investments and/or sustain operations in the long-term.

  3. Authorization of your government. To legally conduct operations.
  4. Teamwork. Employees working for the shared goal of success.

But if you stop to think about it for a second, everything in this shortlist is really nothing more than consensus about how your solution will cater to the needs of your various stakeholders – of your clients, your financiers, ruling authorities, and those tasked with actually doing things.

How to move beyond profit motives & still get rich

The needs and interests of shareholders were originally aligned in the pursuit of profit out of pragmatism, rather than an ideal. 

 

There is a simple reason to this: we never have had a way to ensure anyone claiming they’re pursuing something other than profit won’t change their mind once in a position of control.

 

There’s little need for examples, it’s been going on for decades at least, and the list of cases in which greed, corruption & fraud gets rewarded by authorities with taxpayers’ funds grows constantly.

It’s easy to understand. If you’re alive and reading this, you are inevitably surrounded by megalomaniac liars whom promise everything to source the consensus they need, deliver nothing & then blame someone else. I’d bet you could point out a few of your own.

 

But the crypto industry has grown as large as it is due to the widespread desire for better standards, because of the desire to move away from a system that enables and encourages corporate and governmental corruption & abuse. 

 

This is the long-term purpose of blockchain technology, and the only thing that matters delivering. So here’s the “secret”:

Build it to give it away. Disintermediation is the long term goal.

And it will get you all the consensus you need to establish your business and to thrive. It might sound counter-intuitive, but we argue it is also far more profitable in the current age.

 

Blockchains and smart contracts can be used to create digital environments in which you can guarantee future events, this means, that we now have the tools to ensure long-term promises are kept.

 

It might feel a little ethereal still, so here’s a vivid example of what this could do, that should make it clear to everyone why it is so valuable: imagine a system binding your local politicians’ electoral promises to their own capital assets – if they don’t fulfill them to the fucking letter they personally lose everything, entirely automatically.

Up next is the part 5, the last one, in which we will get to more practical considerations & our own application of it. Click button for more about us.

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We're building the 1st S-DEX (“Self-Decentralizing Exchange”) – a market intermediary using a custom blockchain solution to transition its holding entity into a non-profit over time. Why, you ask? 
To fulfill blockchains' true purpose: so that we can redirect platform generated revenue to our end-Users instead.

Lorenzo Ferrari | CryptoArena CEO Tweet

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Lorenzo Ferrari

Lorenzo Ferrari is the Founder & CEO of CryptoArena.org, a fintech startup aiming to launch the first “Self-Decentralizing Exchange” – a secondary market intermediary using a custom blockchain solution to transition its own holding entity into a fully non-profit Foundation. 

CryptoArena distributes platform-generated revenue to its (active) Users through a game-like, social-competitive, points scoring system. Incrementally, over time, 

all the way to 100%.

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