-> Be the crazy dancing guy.

There's one video I keep thinking about over and over again. Most people have seen the short version. But here's the whole 7-minute sequence with commentary from a different angle. The video starts with people at a festival recording this one dude's attempts at dancing. The people recording him think he's making a fool of himself. The fact that there are several angles of this guy dancing means that, at this point, the crowd is well aware and watching what he's doing. But they stay away. Those who join him seem to have fun initially, but our crazy dancing guy gets too excited and scares them away by making them uncomfortable.

Our dancing friend is relentless; however, as the song changes, he rallies again, and two people show up simultaneously. Now it's a dance party. At this point, you can see the sentiment change from mockery to disbelief and amazement since everyone who was watching decided at the same time they wanted to be part of the dance party.

Recently, I have been contemplating the importance of coordination and its significance for our society. I have noticed a lack of philosophical discussions surrounding the implications of technology in this area. Instead, conversations tend to focus solely on the functionality of the code. I am curious about the consequences of trustless coordination in a world where trust is a fundamental concept. Our legal system was created to address breaches of trust. However, if trust cannot be broken, do we still require the legal system in its current form?

There's an ongoing online discussion arguing capitalism can only thrive when no alternative coordination systems exist. The entire cold war struggle was built around this concept. This was undoubtedly a fact back when the economy collapsed in 2008. Interestingly, this was also the same year the Bitcoin whitepaper was released. However, when it was tested as an alternative a few years later during the Occupy Wall Street protests, it became clear that the protestors had to return to their jobs to sustain themselves. Bitcoin was merely a proof of concept at that time, and the modern financial infrastructure was much more complex than money. We had to rethink our approach to finance. Fast forward to 2020, and #ETH had its #DeFi boom; the successful implementation of several financial primitives on the chain mainly drove this. This caused a surge in demand and gas prices, which drove people away. This again forced us to go back to the drawing board. In 2023, we increased the block size by a hundred times and created programmable money. We are now ready for the future of finance.

Sell Price this pen.

We should ask ourselves some questions before diving head-first into the future of France and possibly repeating the same mistakes all over again.

Do we even know what finance is?

What is money in the first place?

Let’s try something. What do you think is the Price of this pen?

(around $5.99 per box)

For the vast majority of people, the financial guts of the system are hidden from view. Behind every service and product, a complex web of agreements and pipes allows things to happen. You will hear several responses if you ask people how credit cards work or money is made. All of them are wrong. Maybe you get platitudes like "Supply and demand" or "The hidden hand," But is it? A large number of people still exist under the presumption that dollars are backed by gold! Go ahead, ask around. The word free market gets thrown around, but are our needs free? How can they be free if we don't understand them?

(around $5.99 per box)

If only looking at the materials needed to make these pens (plastic, a tiny bit of metal, and ink), perhaps the entire box of pens would cost around 1$ to produce.

But why is that box of pens $5.99?

Well, manufactured goods are worth more money than their parts. Why is that? The rest of the cost is divided between profits, labor, operational expenses, and supply chain. Money represents the utility value of the extra energy we have harnessed to produce something useful for others. I'd argue that money in itself is a form of energy.

Think about it. You spend money for things to happen. The more money you spend, the more energy you can have someone spend on your behalf. When someone complains about inflation, they say their money doesn't make as many things happen as it used to. This concept is the very thing that sets humans apart from any other animal. Dolphins have extremely advanced brains. But they have to be self-sufficient generalists because they cannot classify labor. With the transmutability of energy and money, we let individuals specialize and explore particular knowledge domains. They collectively advance what we can do by allowing anyone else to acquire our work by giving us money.

As we learned with communism, if you try to peel back this abstraction of money and directly assign tasks from a central government, you end up with famine, death, and society hating your system and having that system be essentially money with a different name. All the communist systems that currently exist are reintroduced and continue to use cash, mainly because of the need to coordinate with non-communist states to have any resemblance to modernity. Another big pitfall of central government is that it ultimately relies on a trust chain with infinite points of failure. An opaque system is a leaky system. Corruption = friction. The system's output decreases when money is diverted from its intended target (bribes, fees, misappropriation). With enough friction, the energy(aka money) required to produce a unit of work increases, eventually making coordination less appealing than individualism. In a corrupt, inefficient system, an individual looks to act alone since coordinating with others is in their best interest because of all the friction involved.

The Problem with Capitalism.

Before we go on, we should take some time to define some terms. Capitalism, Feudalism, and Communism are Economic systems. These systems determine how labor is distributed and who benefits from it. Pair this with a system of governance, such as Democracy, Monarchy, or Republic, and you can run a society. By separating the economic ideas from the governance structure, we can be more precise about our discussion.

If you've read this far, you may think this sounds like a defense of capitalism. And for some time in history, it seemed that was the right thing for large-scale enterprises. After all, capitalism is a massive upgrade from what was available before it: Feudalism. In feudal societies, lords were the equivalent of landowners who rented the land to peasants. Peasants did so to be protected from the lords who commanded ded large armies but pledged to a king. In feudal societies, there was no concept of being a citizen of a nation. You were subject to a King.

This has a significant impact on how you build your worldview, as these basic facts inform all of your reality:

Instead of saying, "I'm American," you would have said, "I'm a subject of King Joe Biden the First."
Instead of saying, "It’s 2023," you would say it’s the "3rd year of the right of His Majesty Joe Biden."

It’s not like we've abandoned these constructs, either. Nowadays, you would say:
- "I'm a Google Employee"

Another essential aspect is that these economic and political constructs don't directly interact with the individual. Social structures start with family groups and collectives, subject to a shared narrative through which individuals understand the world and can produce value for the community. This is the realm of companies. A company can be could also be called the "powerhouse of a society" because companies perform the same role as mitochondria in the cell: They take several raw materials and convert all of them to a molecule called ATP (which is the currency of your body) Whereas a company will take several inputs and translate them into profits.

The history of companies dates back to the ancient world, evolving from sole proprietorships to large multinational corporations that we see today.

Ancient Trade and Businesses

In ancient times, business transactions were often conducted individually or as part of families or tribes. These would be the precursors to what we know today as sole proprietorships. Trade was the primary form of business, and this could take many forms, from the simple bartering of goods to the use of currency, as was seen in many ancient civilizations like the Greeks, Romans, and Chinese.

Medieval Guilds

The Middle Ages saw the rise of guilds, which were organizations of artisans who controlled the practice of their craft in a particular town. The guilds were somewhat like modern companies in that they maintained quality control, set standards for their industry, and took on apprentices.

Birth of the Modern Company

As we know it today, the concept of a company started to develop in the 16th and 17th centuries with the creation of joint-stock companies. These companies, like the East India Company and the Dutch East India Company, were formed by merchants who pooled their resources to finance large-scale trading and colonization ventures. They provided limited liability to their investors, a revolutionary concept at the time.

Industrial Revolution

The Industrial Revolution in the 18th and 19th centuries marked a significant turning point in the history of companies. Businesses grew in size and complexity as the rise of machinery led to the mass production of goods. This period also saw the development of the corporation, a type of company that is legally separate from its owners and can be owned by many people through the purchase of shares of stock.

In evolutionary terms, these systems should try to perpetuate their society by allowing individuals to prosper and reproduce. Without any method coordination system, we would most likely revert to a hunter-gatherer state organized around family groups (Gangs are an example of this behavior). In practice, this phenomenon is experienced as the overall well-being of an individual in society. If they do not feel like they have the means to secure what they need to fulfill their "minimum viable desires," they will start to resent the system as it is no denying this individual the experiences others are having. And eventually resort to violence to overthrow the system that they now view as oppressive.

The role of money in this equation is to serve as the interface between government and individuals. This dynamic has hardly changed over the years. Kings had the right to Seigniorage (aka Minting Coins) defended by an oath taken collectively by the Lords. Individual Lords organize labor and earn rent to get the coins until they get enough support to become the king. Governments inherited the right to Seigniorage when monarchies fell, and feudal lords were replaced with corporations. It’s normal to see corporate executives for things like aerospace and finance ending up in government positions or vice versa.

During the french revolution, it became clear that whenever the inequality between the ruling class and its subjects became too large, they overthrew the entire system. This led other monarchs to enact reform not because they believed in it but in an attempt to reduce inequality and therefore hold on to their position of privilege. The Soviet Union was born from the revolution that dethroned some of the last of these monarchs. But despite their lofty ideals, Communists too would get replaced when the Berlin wall fell as they failed to keep up with the growth produced by the Americans and their allies, who presented a much more appealing worldview.

20th Century and Beyond

The 20th century saw an explosion in the number and diversity of companies. Advancements in technology and globalization led to the rise of multinational corporations. These are large companies that operate in multiple countries and often have a significant influence on the global economy.

In the late 20th and early 21st centuries, the internet and digital technologies brought a new wave of companies. Tech companies like Microsoft, Google, Apple, and Facebook emerged as dominant forces in the global economy. The concept of startups, small companies with high growth potential, also became prominent, particularly in the tech industry.

Beyond the Limits - Why corporations go too far

Historically, tiny to medium-sized businesses were deeply embedded within their local communities. These companies relied heavily on local resources, including employees, and their success was tied to the success of the local community. Because their employees were also often their customers, these businesses had a vested interest in paying living wages and ensuring the well-being of their workers. This benefited the local economy as money was recycled within the community, contributing to its overall growth and development.

However, globalization has changed this dynamic. As companies expanded beyond local and national borders, their workforces and customer bases dispersed. The direct link between a company's success and the well-being of a specific local community became diluted.

In the pursuit of increased profits, many companies have outsourced jobs to countries where labor is cheaper, resulting in job losses in their home communities. In some cases, this has led to a decrease in wages and working conditions, as companies are less incentivized to ensure the well-being of workers who are far removed from their primary markets.

Moreover, multinational corporations often have such a broad customer base that their employees make up only a tiny fraction of their overall market. This further reduces the incentive for these companies to pay living wages based on the argument that their employees are also their customers.

Karl Marx, the 19th-century philosopher, economist, and sociologist, had much to say about the nature of capitalism and the relationship between labor and capital. Still, he did not directly comment on the phenomena of globalization and multinational corporations as we know them today because they largely emerged after his time. However, several of Marx's theories can be applied to these phenomena.

1. Alienation of Labor: Marx argued that under capitalism, workers become alienated from the products of their labor because they do not own what they produce; instead, it's owned by the capitalist (business owner). In the context of globalization, this alienation might increase as workers in one country may produce goods for consumers in another, further removing them from the fruits of their labor.

2. Exploitation of Workers: Marx also argued that capitalists exploit workers by paying them less than the value of the goods or services they produce. The capitalist then sells these products for a higher price, pocketing the difference as profit. In a globalized world, this exploitation can become even more pronounced. Companies might move their production to countries with cheaper labor and weaker protections to increase profits.

3. Commodification: Marx warned about the dangers of commodification, where social relationships are reduced to transactions, and everything is assigned a monetary value. In the age of globalization, this process is accelerated as even more areas of life are integrated into the global market system.

4. Class Struggle: For Marx, class struggle—between the bourgeoisie (owners of production) and the proletariat (workers)—was the engine of history. Globalization has arguably intensified this struggle. While it has created wealth for some, it has also increased inequality and precariousness for others.

5. Imperialism: Although Marx did not elaborate much on imperialism, later Marxists such as Vladimir Lenin did. They argued that capitalism inevitably leads to imperialism as capitalists seek new markets and resources. The expansion of multinational corporations could be seen as a form of neo-imperialism, with corporations rather than countries as the imperial powers.

It should be noted that while Marx's critique of capitalism was incisive and influential, his proposed solutions, particularly his advocacy for a proletariat revolution and the establishment of a communist society, have been controversial, and their implementation in various forms of communism and socialism have had mixed, and often negative, results.

If Marx were to be involved in this conversation, it's plausible he would be interested in the potential of blockchain to change the dynamics of the capitalist system. Here are a few concepts he might consider based on his theories:

Blockchain, with its inherent decentralization, has the potential to upend traditional corporate structures by distributing power more evenly. Rather than a handful of top-level individuals holding the reins, every participant within a company could have an equal say, promoting a more democratic governance model. This technology also can automate the distribution of profits fairly and transparently, thanks to the capabilities of smart contracts.

This aligns with Marx's vision, where workers receive the total value of their labor. The peer-to-peer nature of blockchain transactions further streamlines business operations by eliminating the need for intermediaries, making the process more direct and efficient. Additionally, the transparent nature of blockchain allows for all procedures to be auditable, fostering an environment of trust and accountability. Blockchain can bolster more cooperative business forms, fostering an environment where everyone's contribution is recognized and rewarded.

Trusless = Don’t trust, verify.

With decentralized ledgers you are thrown into an entirely new paradigm. Compare blockchains to a public bathroom stall in a gas station. They are open to anyone to write or read; you can put a poorly drawn picture of a monkey on it. However, you don't know if the image will arrive by the next time you return to the stall; you cannot prove to others that you drew that monkey unless you include trust (and having to bring the person to the booth with you, which is weird). To have a public bathroom stall behave like a blockchain, it would need to have its walls replaced with an empty bathroom stall that you can write on—and stored every 15 seconds. Once you register on that bathroom stall, you can point anyone to the exact place in the panel where you drew your masterpiece. They could also verify that it hasn't been transferred to anyone else. All these panels would also be transparent, representing anyone who can independently see what’s being written on. It would be a nasty bathroom stall, but that's not the point.

What’s the point?

Removing ALL the friction.

Here's the gas station owner...

This is Richard Heart.

He cannot be trusted at all. Regardless of how many watches he has, I wouldn't trust him to give me the time.

But I would use his product $Hex.

Why? Because It’s a smart contract.

https://etherscan.io/token/0x2b591e99afe9f32eaa6214f7b7629768c40eeb39#writeContract

There's a stake and an unstake function that the user calls. It’s not an agreement between me and Richard Heart. It’s an agreement between me and the Hex smart contract. In this context, the case of Richard Heart and $Hex highlights a critical advantage of blockchain—the ability to verify a smart contract independently. This doesn't require trust in an individual or organization but relies on the open contract's code, inspectable by anyone, to guarantee the agreement between participants. This fundamental shift in economic interactions reduces the necessity for trust, and instead, we rely on verifiable, immutable code.

Let’s design the new Renaissance.

The Renaissance, a period in European history marking the transition from the Middle Ages to modernity, was driven by several groundbreaking innovations, including financial, like double-entry bookkeeping. This system, first codified by Luca Pacioli in 1494, made the time's complex economic transactions and financial activities trackable and understandable. It allowed merchants and bankers to record their assets and liabilities more accurately and led to more reliable economic planning and growth.

City-states' ability to mint their currency also provided them with a significant degree of financial independence. They could control their currency's value, allowing them to manage trade and wealth within their territories effectively. This further contributed to the economic dynamism of the era and facilitated the spread of Renaissance ideas.

The blockchain technology that underpins cryptocurrencies today can be seen as a modern parallel to these historical innovations. Like the independent Renaissance city-states, the blockchain allows people and groups to create their currencies (cryptocurrencies) with control over their issuance and value.

Moreover, blockchain opens up new possibilities for organizations. Traditionally, communities and nations have been geographically based, but blockchain allows people to organize around shared ideas or interests, regardless of physical location.

One of the most disruptive potentials of blockchain is the democratization of Seigniorage—the profit made by a government by issuing currency. Blockchain can create a currency, meaning anyone can benefit from the value generated as that currency is adopted and used. This potentially decentralizes financial power and stimulates innovation.

Companies, in essence, can be seen as coordinated efforts to create value. In the world of blockchain and cryptocurrency, these could take the form of Decentralized Autonomous Organizations (DAOs). DAOs use blockchain and innovative contract technology to create organizations where decisions are made by stakeholders (token holders), not centralized authorities.

This leads us to the "changelog" for what could be considered "Companies 2.0" in the age of blockchain: