Community ownership as a blockchain adoption model
This piece first appeared in Jeremy Epstein’s ebook on blockchain adoption, “Blockchains in the Mainstream”. Read Fred Wilson’s review of the ebook here.
With the growth of B corporations, equity crowdfunding, and technological competition, we are beginning to accept that the industrial “operating system” upon which we build companies is a competitive differentiator. Blockchain-focused projects are taking this notion even further in the area of fundraising and community ownership.
Applications running on public blockchains have two core properties that set them apart from traditional products. The first is a kind of culture that not only elevates open source and open communities as veritable prerequisites for participation, but also natively exposes the key product metrics themselves — something seldom witnessed in the world of competitive private companies.
The second is a shift of ownership interests away from a few accredited high net worth private investors (typically VCs) and toward a large number of global community micro-shareholders (currently enthusiasts). While VCs have traditionally advocated laboriously for founders in generating traction and community around a product, decentralized ownership models have not only been creating impressive runways, but also attracting aligned and active user bases at the outset of projects.
Look no further than Steemit to see one of the most simultaneously innovative and adopted public blockchains. Steem is the only blockchain that can boast tens of thousands of mainstream user accounts as well as, non-trivially, a semblance of gender diversity. Whereas entire research industries are fixated on decoding the metrics and financials of opaque private firms, an analyst can to her heart’s content read key product indicators right from the Steem blockchain: utilization, activity, retention, quality, and user acquisition costs, to name a few.
Not only that, but to date Steemit (which sometimes describes itself as “an Internet small town”) has spent virtually no marketing capital. Instead, in June, community members authored a free 84-page Amazon e-book for newcomers entitled Steemit 101. In August, a community drive funded and erected a Steemit billboard in Chicago; then, another group erected one in Manila. SteemFest, the platform’s first international conference, was self-organized by Steemit’s bloggers (CEO Ned Scott will be in attendance, though he’s coming as a guest). Incentivized by slowly vesting ownership in the platform, “Steemians” have taken it upon themselves to build an impressive third party ecosystem of alternative frontends, analytics tools, payment buttons, and quality control bots to aid the social media experience.
Community ownership is a powerful tool for adoption, and new models of building companies and products are increasingly important in the competitive high technology landscape. As we continue to observe the evolving world of blockchain technologies, the power of incentives and transparency will continue to create compelling adoption stories. Will industry recognize these properties as core innovations and see beyond blockchain as merely an efficiency technology?
Jake Brukhman is co-founder at CoinFund, a blockchain technology research firm and proprietary cryptoasset investment vehicle. CoinFund’s team brings together expertise in high technology, quantitative finance, private equity research, and social innovation research to generate insights into this exciting growth space. CoinFund provides consulting and research services to investors and companies interested in blockchain technology. Follow us on Twitter or join the discussion on our open community Slack.
