Open-source Capital
TLDR below. This is not financial advice.
Catch the video on YouTube
General Conclusion
The power of blockchain from an economics perspective.
There are a lot of people talking from the technological and financial perspectives, but very few articles discuss this dimension. There is no right or wrong, just a different dimension of analysis.
Two Resources
Decentralisation is the crux of the future. Others are likely to share about financial inclusion and digitisation, so here is the economics perspective instead.
In economics, we have two resources, Labour (L) and Capital (K).
In the past, we priced goods based on the labour hours used to produce them. That is all good, equal and easy. But things change.
This is a very simple understanding of how goods are priced, and how companies make money. Look at these big companies like Facebook, Amazon, Google, YouTube. These companies make money using algorithms and other types of non-physical capital (e.g. data).
Traditional Capital that we know: Land, Labour (human capital).
Modern Capital powered by tech: algorithms from machines or data.
As we move towards embracing technology and the new way of doing things, the modern capital will start to take over traditional capital in how companies make money and how our society function.
What happens to Labour?
Labour is replaced by machines. Machine owners reap most benefits. Hello, Gini coefficient.
It leaves very little left and is almost like a machine and the algorithm will do it all. This is especially true when labour is easily removed or replaced with machines. (See here, here and here.)
As we evolved, we outsource mundane tasks to machines to enable the completion of tasks. Suddenly, the pricing of goods is not just the cost of labour, but the cost of machines and technology. Machines are capital. People who own the machines are capital owners. People with capital are now reaping the profits. People providing labour are not receiving as much of the profits.
Back to Facebook, Google and other tech companies, these companies have algorithms that help and deliver all data and information to different people. That is dangerous, but also quite effective. Because it is like the top 1% of the world has all the different sources of capital and they can control everything. (No, really.) Then there are others with very little capital and they cannot add much value.
If anything, the world of tomorrow is inching closer towards benefiting capital (K) owners instead of people providing labour (L). Look at technology like GPT, machine learning, smart contracts and other forms of automation. These profits will be given to capital owners. Inequality increases when we replace people providing labour (L) with more efficient use of machinery capital (K).
Blockchain as Capital
Blockchain will arrange like? How will blockchain be different? And how can we change that?
Web3 to the rescue. Open-source and machines for everyone. Oprah style.
It is very interesting if we consider changing the monetary system, like building a different kind of system for the future. The whole premise of blockchain is a DLT which is the idea of distribution and forms of rent extraction. So not only distributes the power within governance, but it also distributes capital. Specifically in the Machinery under which part of the capital belongs. And that is a very powerful thing being built today.
This is where DeFi comes in. It builds a base layer which is an open-source technological stack (K) that is not owned by a single person. Anyone (L) can tap into this capital available to build innovative products and solutions. It becomes accessible and available to everyone and anyone willing to learn.
The whole idea of the website is open source for everyone to use and create many different things. Base layer technology is where we can build many different things. So this is very powerful and it is a shared capital. Look at Wikipedia, look at the Github repositories, look at YouTube videos.
Capital is not just types of machinery. It is also knowledge, tools and other tech stacks. This is distributed and people can learn to and create on them.
We are seeing these new technologies, these new open-source protocols being built. Anyone can copy them because these new algorithms, Machines or funds now become a collective resource or a collaborative resource.
Open-source Capital
Back in the old days, where we had the land which was a cooperative benefit, somehow people owned a share of it to create wealth and accumulate it from them. (Don’t @Georgism to me.)
When we move from the physical world to the traditional world, we do not have to use or shrink this land. It does not have too much ground in the digital version and distributed to version. It is like another sort of machinery that lets us do what we do. We need the earth and the physical world because it is the toughest thing ever. In the Physical World, you do not exactly need that. But in the Digital World, you need machines, you need bandwidth, you need everything put together to build the digital economy we are talking about in a decentralised way.
We build fundamental capital infrastructure that’s for everyone. (E.g. Distributed technology stack)
This whole idea is open source for everyone to use and create many different things. Base layer technology is where we can build many different things. So this is very powerful and it is generic. As soon as people move to collaborate, they will either build from the open-source or open-source algorithms that can be distributed by everyone and people can learn and create on them.
Allow exploration of new systems built on these capital infrastructures. (E.g. lending and borrowing protocols)
We are seeing these new technologies, these new open-source protocols are being built. All of them are open-source, so anyone can just replicate them. Because these algorithms, these machines or these New Capital now become common collaborative good or common collaborative resource.
Yesterday’s Land is today’s Bandwidth.
Going back to old days where we have land was a collaborative good, somehow people go to own part of it possible to generate and accumulate a lot of wealth from them. As to move from a physical world to traditional world, we would not this land again, but there is just not land, it is a versional land.
It is not so much land in the digital version and distributed to the version. It is more of a different kind of Machinery that enable us to do what we do. We need land and physical world because that is the most difficult thing ever. In the traditional world, you do not exactly need that. But in the digital world, you need Machinery, you need bandwidth, you need all thing come together to build this digital economy that we are talking about in a distributed way.
A true level playing field.
And one of these best things about what we are doing is with this machinery and capital is that we treat this Capital. We distributed it. It builds a level playing field, where people who are labour owners or where they earn way from labour instead of capital. We can use these open-source tools available.
This is an entirely beneficial thing to build the new generation of open sores common collaborative resource, which is capital, which is this machinery. It is collaboratively owned by everyone and anyone. That is a powerful feature that we build thing because decrease level plays in the field.
I think that is one of the future that decision because that is how we can potentially create more Equitable Future Generations.
TLDR: Open-source protocols and base-layer tech stack helps to level out the playing field. This new digital capital becomes important in building our future, whilst managing inequality in the system.