It is roughly 150 years since we saw the last change in the business model. Today, it is easy to think that large, mega-companies were always the norm. The truth is they are a relatively new creation.

In fact, it was not too long ago that the corporation came into existence. Before that, everything was basically a proprietorship. Most businesses were entities that were financed by local banks.

This changed as the need for more money grew. Probably the first industry to require big bucks was the railroad industry. The need to develop cross country meant that the banking system had to expand to be able to handle such an endeavor. However, the challenge was raising money to fulfill the need.

Since no one bank could finance the entire thing, a new form of ownership had to be invented. Here is where we see "fractional" ownership enter the picture. The idea was to sell the shares of these new companies to the wealthy of the time, mostly European aristocrats.

As we can see from the following chart, this set off a boom that was felt globally. Since the late 1800s, trillions of dollars in wealth was generated through corporate entities. The United States stock market alone is now worth over $30 trillion.

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The evolution certainly paid off. We saw enormous growth from investment in many different kinds of technologies. What was the Invisible Hand of Adam Smith became the Visible Hand of the corporation.

Of course, imagine being a landowner at that time and being offered a "share" of a corporation. As one who was accustomed to investing in land, something tangible, suddenly you were being presented with an opportunity to buy "a piece of paper". It probably had to sound absurd at the time.

Isn't it interesting how things repeat themselves? To many, the idea of cryptocurrency and businesses such as a DAO sound pretty ridiculous. How can you have a company that has no ownership? What gives the tokens any value? Isn't this akin to asking what makes that "share" (piece of paper) valuable?

The businesses we are seeing erected are based around the concept of the commons. This is an idea that was around for centuries. The challenge was the scaling. There were many drawbacks traditionally to making this a viable structure.

However, digital technology and blockchain is altering that. Now there is a way to scale up the commons idea while offering the benefits of the corporation.

In the past, commons had to be local. It required face-to-face interaction since trust was required. Without the governance model of a corporation, trust was generated by being familiar with those involved. Government regulation could assist in this effort yet, ultimately, it took the agreement of the participating parties.

Of course, as we saw many times, if one party decided to operate outside the bounds of the agreements, the entire common system could collapse. Fisheries are a prime example where one or two large players came in and destroyed the entire fishing grounds.

So how do we create a system that is based around the commons which also can scale?

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Here is where blockchain provides the ideal format. Whereas the corporation allowed for the scaling of efficiency, we now can see the scaling of governance.

With a crypto based system, each individual is offered incentive to operate within the bounds of the common. The running of the system is based upon every participant putting one's self interest aside. While this is still present, the blockchain requires that each player operate according to what was established in the code. Therefore, unlike commons in the past, trust is already built in. If a player tries to do something outside what is established, such as double-spend, the system rejects it.

Naturally, when we say "system" we are really referring to the community at large. Everyone has an active role in what is taking place. Thus, in the double-spend situation, the ones validating the blocks are offered an incentive to keep everything above board. If one does try to do this, anonymous participants from around the world reject the transaction. Everyone else can feel safe knowing the validation process prevents the self interested behavior that would extend outside the bounds of the system.

Here we see how the overall common is protected and goes forward keeping the collective interest in tact. As long as anyone operates within the establish norms, activity can take place.

This could be setting off another major push towards abundance. The same way the corporation entered the picture 150 years ago and became the defacto business structure, we could see the same path followed by crypto and blockchain. It could unleash tens of trillions of dollars in wealth with billions of people all over the world participating. Here is where the evolutionary process is enhanced. Corporations tend to benefit a small amount of the overall population. Commons can benefit everyone who is participating.

Corporations exist to make a profit for the shareholders. This was the case in the 1870s with the railroads and is the same today. No matter how much CEOs talk about stakeholder responsibility, the only thing that truly matters for their job security is the quarterly numbers. All major money players on Wall Street know this Conscious investing makes good headlines but it if fails to deliver the needed ROI, money managers will buy what offers the return.

A new business structure can alter this mindset completely. Instead of just focusing upon profit, commons takes into account all interested parties. Governance models can be established (and coded) to take all the different variables into account. Under this scenario, customers are not leveraged with the goal of squeezing the most money out of them. Instead, they are active participants in the entire ecosystem. For their participation, they too are rewarded through the tokenization mechanism.

Scaling governance without the need for localized trust is truly an amazing breakthrough. Until we step back and ponder it, we do not realize what is before us. We now see how ideas that were around for centuries are suddenly viable since we can establish trust while fostering global participation.

The outcome could be a major economic boom just like we witnessed over the last 150 years. Only this time, we could be headed towards super-abundance.

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Posted Using LeoFinance