I recently improved my work from home setup so that my work laptop plugs into a single endpoint for a monitor/speakers/microphone/camera setup.
When I am not using this stuff for unnecessarily high-production video conferencing, it’s convenient to use this setup to blast loud music in the background while working. Since it’s my work laptop and I don’t want to put too many personal programs on it, I have started just playing longer-form sets on YouTube. I’m currently training the algo attached to my work account to feed me absolutely filthy synthwave mixes.
While the discovery process is really nice, there’s one thing that is absolutely killing me about reverting to YouTube: the ad load.
I don’t have data for this, but anecdotally I am convinced that the YouTube team has aggressively ramped up the ad load it places on users. Yes, I can get around this by paying for premium or being better about keeping ad blockers on, but that’s beside the point here.
What irks me most is that I’m actually a long-time Google shareholder, so it feels obnoxious to be milked in this way. I am better than a customer, I am technically a part owner, and so should be treated with the corresponding deference!
In the equity world, this line of thinking of course feels absurd. If you hold the equity, you are not entitled to any special treatment, you have a fractional ownership on some future discounted cashflow, there is no way to privilege you in that company's ecosystem.
There are probably regulatory reasons for this involving solicitation laws, but even if there weren’t rules about this, the logistics alone of doing this in the fiat world would just be too complex.
Imagine if being an Amazon shareholder meant you got free Prime.
Imagine if being a Google or Facebook shareholder meant an ad-free experience.
Imagine if being an Apple shareholder meant better deals or earlier access to the iPhone and other Apple products.
Imagine if being a Ford or GM shareholder meant more attractive Auto Financing.
Without the pre-history of what retail investors have grown accustomed to, if you were designing the system in a vacuum, these deals for shareholders would all seem like very reasonable incentive alignments for companies to grant.
Companies should want their best customers to own a piece of their company’s success. Companies should want the shareholders to be their most passionate product advocates. Companies should want their users to get rich participating in equity upside for their years of loyalty.
Of course the rules were not designed in a vacuum and retail/customers have not come to expect this.
However, as absurd as this incentive alignment seems in fiat world, we have been able to design things from scratch in the Crypto world - and it’s this approach from first principles that leaves me so unenthused about corporate securities.
All the usual caveats here of course: a Corporate Security and a Crypto Token are two radically different categories of assets. A security is some institutionally sanctioned fractional ownership of a legal entity, whereas a token is (from the point of view of the fiat world) some arbitrarily granted digital thing that you can use online for nebulously defined purposes.
In prior crypto market cycles, the value proposition of an equity over a token was very clear. The token’s use cases were not totally obvious and the networks they supported did not have a ton of real usage yet. In these cycles an equity or other security was still considered much more sensible because at least the drivers of value were well-defined.
I think in this cycle we are finally seeing an inversion of these values. The token-brain is overcoming the fiat-brain.
In the modern crypto ecosystem, there should be no doubt about what a token is: a token is the cryptographically-secured right to participate in a value network.
Tokenomics has continued to advance rapidly and we have a much better understanding of fees, staking/yield, governance, utility, burning, deflation, and other levers of a network or token’s value.
Furthermore, the high quality crypto networks and projects of 2021 have real use cases and millions of real users across DeFi, crypto gaming, digital ownership (NFTs), platform and DAO governance, social tokens, etc.
Though Bitcoin’s value proposition was never in question in the same way, it’s still more obvious than ever before that ownership of “the Bitcoin token” (BTC) is participation in its value network. BTC is really the most obvious and simple example of this.
Token ownership gives preferential value participation in a rapidly expanding universe of value. More tokens of a given network make you more important to that network.
The best part is that a lot of these developments in token functionality are only a couple years old.
We are just starting to see the very early trapping of what token value proposition is going to look like, there can be no question that several years from now will see an orders-of-magnitude increase in token value sophistication.
Now… returning to the exploration of Corporate Securities again, what are you really getting here?
Yes, you get an ownership stake in a valuable company, the right to some future cash flow or liquidity event - but what else?
The security is not cryptographically secured, you’re trusting legal institutions and legal stability in the country of issuance.
You can’t self-custody and instead need to rely on a whole bunch of intermediaries with their own competing incentive structures.
Even the sanctity of the market structure upon which equities trade is called into question in an era of Internet-scale retail trading.
Most importantly, as a user, the company will treat you no differently as a retail shareholder.
If you had $10 million USD worth of any of any one Big-Tech stock (a very tiny % of the company still), it would still do next to nothing for you on that company’s platform. These guys are still going to pepper your experience with pointless shitty ads.
My token-brain is continuing to just fully take over.
I don’t really understand anymore why we are wasting time with meaningless trusted database certificates that don’t have any network utility.
“The corporate security” as a technology needs to radically evolve to keep up in the age of the crypto-verse and the retail investor internet.
We should really have them evaluate their tokenomics because these things are quickly becoming useless.
Original Token-Brain Thread
-Colin Goltra, April 2021