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The Economics of Decentralized Organizations: The End of For Profit Corporations or not?

The Economics of Decentralized Organizations: The End of For Profit Corporations or not?

Articles / 2018-10-02 09:21 AM

The industrial revolution was marked by the construction of a post-industrial or information society and its further transition to the digital age. Financial relations are increasingly becoming electronic.

In today's world, the catalyst for the development of the world economy is the activities of corporations that meet the needs of consumers. However, again and again, the fundamental organizational principles and commercial nature of activities have had a negative impact on the environment, markets and the lives of millions of people around the world. The developing blockchain technology has opened up ways to expand opportunities for a branched independent Corporation that meets the challenge of time is able to coordinate the goals, interests, and actions of all participants in financial activities, as well as possibly have a beneficial impact on the environment.

The State of For-Profit Corporations today

Organizations may be established for any purpose not contrary to the law of the state. Nevertheless, the primary task of any Corporation is multiple increases in profits. The statement that the main purpose of economic activity is to increase the welfare of business owners is widely criticized.

One of the most negative consequences of achieving the goal of organizations is environmental pollution.

There is always a conflict of interest between the top management of the company and the shareholders.

What is Profit From Customers And Products

Current consumers are accustomed to being forced to purchase goods and services, and their purchasing power is continuously assessed. For buyers prepared a solution to the problem of lack of resources, for which there is a banking system. Consumers are tolerant of the need to purchase goods and services on credit.

For most companies, consumers are a commodity necessary for lending to advertisers and other businesses. Cases of unauthorized transfer of personal information of Internet users making payments by electronic means are becoming more frequent.

The distant values of the commercial giants from the people whose needs they allegedly serve have recently been uncovered as a result of a breach of the Equifax consumer database and the fencing of Facebook user data by the political consulting firm Cambridge Analytica.

This information is transmitted by centralized databases, which do not inform users about how their personal data is used. Social media users are increasingly exposed to Intrusive, targeted advertising.

Decentralised Autonomous Corporations in modern society

By means of Bitcoin were presented the opportunity and need for comprehensive implementation of organizational structures with native code. This fact involves the development of blockchain and wide dissemination of the opportunities of using cryptocurrencies everywhere.

The software supporting the operation of the blockchain system and the distribution of bitcoin provides compensation to all participants who create new blockchains in the common chain. For each new block of the blockchain system, 12.5 bitcoins are charged. According to Google, the cost is currently estimated at $ 91,950.

Despite the openness of the blockchain and bitcoin codes, even the developers do not have unlimited opportunities to manage the network. Approval of changes to software code requires acceptance by the vast majority of operators. The network is currently represented by 105 countries. The maintenance of the network is provided by blockchain nodes, the number of which is more than 9000. The vast majority of nodes contain data centres filled with powerful industrial equipment. This fact provides a minimum possibility to disable the chain blocks. This ensures the continuity of the network.

Thus, the world's first extensive independent system of interaction of participants of financial institutions was created. Management of the system is subject to the rules laid down in computer programs tied to the blockchain. The above function is called smart - contracts. Since its inception, it has been expanded by other blockchains such as Ethereum.

Unlike bitcoin, whose primary task was to create a digital currency, Ethereum developers consider the ether a kind of fuel, the presence of which is necessary for the successful functioning of the platform.

This is in some way a reward for machines that perform operations in the system, acting as a guarantor of the quality of applications that serve the network.

Thus, due to blockchain systems, an ideal basis for the creation of non-centralized branched independent corporations is formed.

Universal Market Centralization

Today, the most famous and widespread centralized market in the world is access to the Internet. At some point, Google became a monopolist in this market. The company declared its main goal to systematize existing information and ensure its dissemination and accessibility to a wide range of users. Given the status of the parent company, Google's goal is also to increase the market value of the organization. Currently, the company's mission can be formulated as follows: "Providing relevant, cost-effective advertising”

However, there are cases of establishing the incompatibility of the goals of the business models of advertising issued by the information in the search query.

According to Google, the revenue part of the company is mainly formed by online advertising. According to this statement, it is not clear who will find the provided online advertising significant. Its importance is determined by the number of clicks, the statistics of which is carried out by the Google AdWords platform. Most users think provided the wrong results.

Thus, commercial goals are always in the foreground and influence the development of the global market. The problem of inconsistency of actions of all participants in the interaction system comes to the fore, which hinders progress. The interests of some are suppressed and not taken into account, while others increase market value. Users are only third-party observers and are used as an element of the system, which is aimed at marketing activities.

The inconsistency of interests of business owners, operators, consumers, and customers is a consequence of the widespread industrial revolution. An “atmosphere” of promises left without fulfilment has been created, which can be solved with the help of such smart- contract systems as a Decentralized Autonomous Corporation, which will allow taking into account the interests of all users, reducing disagreements and reducing the number of intermediaries.

Decentralization of the system will allow equalizing the rights and control of all market participants.