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<div class="title">
THE EVOLUTION OF FUNDING<br>
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<p>The ability to move our capital around to wherever we see fit is a cornerstone of human interaction and it allows us to effect the world in a very real way, as the phrase goes, we vote with our wallets. When it's a truly free market, this mechanism acts as a constant pruning of organizations with sub standard products, services and decision making, leaving the strongest to compete and innovate - in turn giving us better stuff.</p>
<p>At the moment though, we are mostly constrained to which businesses we decide to buy goods and services from and which charities that align with our particular values. Even in this area where we feel fairly free to make choices, the reality is that since we don't live in a free market economy, what is offered to us currently is a fraction of what could be possible. Without all the regulations, arbitrary rules and favors given to companies who donate to governments and all that nonsense we could be living in a very different, highly prosperous world.</p>
<p>That's not even mentioning moving capital outside of those two main areas, say for which social programs or scientific projects get funding, or how we respond to disasters and wars. We usually leave it down to abstract third parties (like governments) to do it with our taxes and often we find that they are inefficiently spending it on preposterous policies which we have no control over.</p>
<p>This is going to change. With cryptocurrency and the coming wave of decentralized funding and free market platforms, the sacred concept of real choice will be reintroduced to individuals, away from centralized institutions, and that ability to freely choose where our money goes will radically transform many areas of life.</p>
<p class="subtitle">BUSINESSES - PRODUCTS & SERVICES</p>
<p>Founded in 2009, Kickstarter has been leading the way in crowd funding and to date their users have raised over $1.2 billion for some 65,000+ projects that they want to see developed. I mean talk about the essence of “vote with your wallet”! You have projects like the virtual reality Oculus Rift raising $2,437,429 or the Kano Computer kit which teaches kids about computing getting $1,522,160 or the myriad of cheap 3d printers frequently raising upwards of $1million to give their products to the masses. From games, to movies, documentaries, art and high technology, this win/win way of getting capital to entrepreneurs in return for things prospective customers actually want is beautiful.</p>
<p>What's more exciting is that this is only one platform and the evolution of this type of system is going to explode like a super nova once you add distributed systems and cryptocurrency into the mix.</p>
<p>Paypal doesn't want to release project funds? No problem. With bitcoin, there will be no more instances of funds being frozen until you prove yourself to some random Paypal employee. Absolutely any type of project or service can make a presentation to the world and those interested can fund it directly.</p>
<p>Have disputes over any aspect of the product development or delivery? Since blockchain based technologies are basically verifiable ledgers signed with signatures, it'd be possible to set up security deposits, escrows, voting systems, contracts and more to align incentives so that the project goes smoothly.</p>
<p class="subtitle">BUSINESSES - FUNDING & EQUITY</p>
<p>This direct nature of cryptocurrency allows for the crowd funding of investment rounds. Want to start a lemonade stand but need 0.5 BTC funding? Make your case to the world and see if anyone is willing to buy in. It's really that simple. You can set terms of contract in the blockchain and ownership can be verifiable and indisputable with encrypted signatures. Throw in security deposits and automatic escrow systems in there and then it's in the interest of both parties for things to go smoothly.</p>
<p>A lemonade stand may seem stupid and trivial, but really this type of startup funding can be as applicable to a tech startup in Silicon Valley, a small organic farm in India or a school in Kenya. It doesn't matter. It is truly global and there are no gatekeepers to please (or bribe) before you're ‘allowed' to take part. Can you fucking imagine? This is the first time EVER in the history of humanity that this has been possible.</p>
<p class="subtitle">CHARITY</p>
<p>I remember hearing Max Keiser talk about how Greenpeace has $100million sitting in its bank and how that itself could be going against what the charity stands for. I have no way to verify the claim (Keiser does have a habbit of saying extreme things), but if you think about it, he is right. Just look at HSBC and how it came out that they were financing Mexican drug cartels, who are responsible for thousands of deaths. There has to be more banks making “investments” in all sorts of shady businesses. Weapons manufacturers, terrorist organizations, despotic regimes, you name it. Look it up and see for yourself.</p>
<p>So if a charity like Greenpeace does indeed have $100million sitting in their bank account, that very act is going in the opposite direction of the charities stated goals. For example if some anti-war charity has money at a bank and the bank is actively investing in weapons manufacturing companies, then giving money to that charity is in fact making the world a more violent place, and most donators fail to connect these dots.</p>
<p>This can be solved by charities having purely cryptocurrency funds. The distinction here is that they truly OWN their funds and are not letting a bank 'look after' it for a while. The charity could set up multisig accounts so that a certain number of employees have to ok any transaction before it can go through. The entire funds would be available on the blockchain, for the whole world to see.</p>
<p>Even if the charity is completely bitcoin oriented, there is one remaining, glaring problem. Once anyone gives money to a charity, you're pretty much crossing your fingers, hoping that they actually spend funds wisely and follow through on their stated aims. You literally have zero control over what the charity does with the funds once the donations are made. The site Charity Navigator does a good job of getting stats about how charities spend their money and you would be shocked by the results.</p>
<p>They have compiled a list of the highest paid CEOs of charities and it is pretty ludicrous. At number one for 2013 you have the Caucus Educational Corporation whose CEO earned a whopping $444,640 (Nice to see they used the corporation name for their 'charity' hmmm). This continues to the number 10 spot, The Interfaith Alliance Foundation which gives its CEO just over $200k a year. So in a lot of cases when someone wants to do a good deed, they often end up paying for the lavish lifestyle of some CEO. (Ok I don't know what the CEOs lifestyle is like, but I've got a gut feeling).</p>
<p>So once the charity CEO has their nice fancy house and vacations sorted (lol), we turn to what the charity does next with the money. Animal charities are a good example. PETA and the RSPCA both have the stated goals of protecting animals and preventing cruelty and that's great - until you find out that both of them routinely kill 1000's of healthy critters yearly. You also have questionable corporate sponsorships like the one between KFC and Komen called “Buckets for a cure” which aimed to raise awareness of breast cancer with fried chicken. Despite the fact that obesity is a contributing factor to cancer. You couldn't make it up.</p>
<p>If average charitable folk knew about this stuff beforehand, I'm pretty sure many wouldn't be so keen to let go of their hard earned cash.</p>
<p>Cryptocurrency could help introduce a level of accountability and transparency to charities that has never been seen before. With the introduction of smart contracts, voting and multisig accounts, potential donators would have much more say over what their money gets spent on.</p>
<p>For example, a charity could state that they want to carry out certain tasks and spend money doing x. A donator could send money to a multisig account which both they and the charity have to sign in order to release the funds. You could have cool systems where lots of donators crowd fund certain projects in real time, taking an active role in the development of the charity. The project could be set out in various stages, so every time the charity successfully completes a goal, the donator has the ability to release some more funds for the next stage. If the charity fucks up then their funding would be cut immediately. So the onus is squarely on the charity to be as transparent as possible, proving that they are doing what they said they would.</p>
<p class="subtitle">REMOVING THE CHARITY</p>
<p>So after all this talk of corrupt charities doing questionable things, we have to ask ourselves “do we really need them?”. No. No we don't.</p>
<p>The beautiful thing about cryptocurrency is that it unshackles anyone from the need to go through centralized gatekeepers to get things done. Instead of donating to a charity that helps people in some third world country, now you can donate directly to the affected people. Totally remove the charity and all the associated overheads that come with it. This gives people more personal responsibility with their own funds, allowing people to affect lives in real ways.</p>
<p>Imagine in natural disaster or civil war where people need money or have to pay for products and services quickly, yet the local government has collapsed or the banks have failed. Combined with meshnets for connectivity, the affected people may be able to carry on and rebuild their communities faster than the time it'd take for charities to raise funds and co-ordinate an effort. The same can be true for smaller, individual cases too. If someone has a sudden death in a family which leaves the remaining people in a lot of trouble, this type of situation could help ease some of that financial strain.</p>
<p class="subtitle">PERSONAL FINANCE</p>
<p>Like I mentioned in a previous article about micropayments, payday loans could become a thing of the past with the advent of real-time micropayments. That is only the start too. In the US alone, according to the FDIC nearly 1/3 (106million) are underbanked or unbanked. The World Banks 2012 stats state that about 75% of adults earning less than $2 a day don't have a bank account, equating to more than 2.5 billion people worldwide. What are the implications of this?</p>
<p>Well it means that a shit tonne of people are excluded from the larger market for work and business. Imagine if you live in Africa and aren't allowed to set up an online business on popular marketplaces because your country happens to be banned due to scams. You intend to run a totally legit business that could open your prospects up to the entire human race, yet just because you were randomly born in a place, you either can't get a bank account, or credit card companies won't accept business from your country, or the online marketplace websites don't like your IP address. That and other kinds of unfair shit happens daily for people worldwide, but it needn't be so with cryptocurrency.</p>
<p>Like mentioned above, with bitcoin you don't need the permission of banks or credit card companies. You can do it yourself and be paid directly, and without them taking a cut of every potential sale you'd make.</p>
<p>Again, with personal loans, anyone worldwide could give funding or support to anyone else, without middlemen and bullshit hoop jumping. You could introduce smart contracts and systems like double security deposits for safety, so that both parties have aligned incentives to make sure that whatever promises made are kept.</p>
<p class="subtitle">SOCIAL PROGRAMS</p>
<p>This section is a little different since it revolves around money printing, taxes and socialism. In theory this kind of system might sound good, but you can see that all around the world that those in governments have failed the citizens. The financial disparity between ordinary folks and the mega rich elite is growing wider, yet extremely expensive funding for wars and other programs continues.</p>
<p>It's a complex subject, but one of the main factors why this happens is due to central banks printing more money, increasing the supply, and in the process making all of us poorer through inflation. It's the sneaky way to pay for all these ridiculous programs that many citizens don't agree with, since each individual is not seeing a personalized bill for $1million (or whatever) each.</p>
<p>Stefan Molyneux explains this in depth in his talk “Bitcoin vs Political Power”, so check that out to learn more. (<a href="https://www.youtube.com/watch?v=joITmEr4SjY" target="_blank">View Video</a>)</p>
<p>With Bitcoin or another cryptocurrency, it is physically impossible to increase the money supply and degrade the collective value for everyone else. This means that those in power would not be able to spend money on unpopular wars or social programs without raising taxes - and people noticing. The US government has spent Trillions (with a T) on wars in the past few decades. Imagine if that money had been spent supporting the citizens it is supposed to be protecting?</p>
<p>I would even go further to say that for most public services, we don't even need government to do things for us. During the aftermath of the August 2011 riots in London, a lot of property was trashed. Shop and car windows smashed, buildings set alight and general mayhem abound. Yet a group of around 300 people, spontaneously organized through social media showed up with brooms and other cleaning equipment and helped clean up and fix what had happened. These were ordinary citizens, not government workers. I know it's a small example, but it shows that people do care about their communities and they don't need a top down hierarchy to tell them how to fix problems. If you add in the direct funding capabilities through crowd sourcing and the other stuff we've mentioned then you can start to see how some services could be provided totally spontaneously.</p>
<p>Whatever is left for those in government to handle can also be voted on by the people. Direct democracy through blockchain technology would allow totally incontrovertible evidence about the will of the people, so slimy politicos would have a harder time lying to us, though I'd bet they'd keep trying.</p>
<p class="subtitle">SCIENCE FUNDING</p>
<p>Like the above section, science funding is mostly very heavily intertwined with governments at the minute, but that doesn't have to be so. The bureaucrats literally have the power to change the cause of human history by what research they allow and give funding to and those they don't. This kind of funding and research can skew results too if there is political pressure to do so, which potentially can be very dangerous.</p>
<p>This is another gatekeeper that bitcoin and its pals will smash down in due course. There's not much in the way of science kickstarters right now, but there's nothing stopping us creating one. Like personal loans and charity funding, you can align incentives, introduce multi-sig systems, contracts to keep people engaged and honest. If the research is successful and you were an early funder, you could automatically get a share in profits from vaccines, licensing etc since it is provably verifiable in the blockchain.</p>
<p class="subtitle">SOFTWARE DEVELOPMENT</p>
<p>Open source and free software tools are the backbone of a lot of humanities technological achievements, especially in computing. Operating systems, encryption technology, web browsers and so much more are all part of our everyday lives and are either open source, or built using elements that have been opened to humanity. Just think about the web itself. It would never have grown into the indispensable goliath it is today if it had been owned by a single company, proprietary and closed off.</p>
<p>Up until now, important free software tools have been painstakingly crafted and refined by dedicated teams of volunteers. Some receive donations for their work, but the vast majority receive no pay.</p>
<p>Cryptocurrency will be able to take the sometimes slow development times of these sorts of ventures and strap on some rocket boosters. The first way is through direct funding via donations. Since there are no banks or Paypal-like companies telling you who you can and can't donate to, potential funders from all walks of life will be able to donate directly without the gatekeepers. Look at what happened to Wikileaks once the US government strong-armed Paypal and the credit card companies to freeze donations. Bitcoin finds a way around it all.</p>
<p>That's not where it ends though. In systems like Maidsafe, micro payments could be automatic, allowing development teams to work on important projects full time rather than on evenings and weekends. Coupled with a proof of resource type system, you could have it so that any time somebody runs a specific app, the developers can be compensated by constant, tiny payments which alone are barely noticeable, but in aggregate become sizable. The better apps that bring more value and are used more, the more money the developers receive.</p>
<p>You could even go further and integrate a micro payment pay-as-you-go model for all apps, so instead of buying apps outright, you can have the option to only pay when you use the product, plus it could use bitcoin directly instead of app coins. Top-up the built in wallet on the app and off you go! Love a piece of software, but don't use it enough to justify the high price tag? Bingo, problem solved. Without cryptocurrency, this would not be viable since the processing costs of each transaction would outweigh the micro payment cost. Just imagine how much extra cash you'd have if chose to use the pay as you go version of every piece of software or digital item that you currently use?</p>
<p>--<br>
BY NODE</p>
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