Leading the Revival of Individualism & Self Reliance

These Entrepreneurs Lived 90 Days Using Only Bitcoin

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Utah is known primarily for its annual Sundance Film Festival, its abundant Mormon population, and an affinity for Jell-O salad that even its residents don’t fully understand. But what is less known about the Beehive State is that it is often on the cutting edge of technological breakthroughs, and cryptocurrency has been no exception.

The newlyweds were about to spend the next three months living solely on Bitcoin.

In fact, the University of Utah was one of the first colleges to join ARPANET—an early form of the internet created exclusively for the Department of Defense— and served as a node in the network. Additionally, the state was one of the first to acquire the much sought after Google Fiber and has attracted tech companies like Adobe, as well as being the home of Overstock.com, one of the first major companies to accept Bitcoin on all purchases.

And while Utah is technologically savvy, the entire state still has a very simple hometown vibe. Its culture is rooted in tradition and its residents have been living a certain way their whole lives without any particular interest in seeing that change. It is for these reasons that this state offers such a compelling backdrop for a documentary on cryptocurrency.

The Bitcoin Frontier

Like most newlyweds, Austin and Beccy Craig were excited about returning home to Utah after their honeymoon and beginning their new life together. But unlike most couples who find their lives calming down after the chaos of wedding planning is over, the Craigs were about to embark on an adventure no one had ever attempted before: Beccy and Austin were going to spend the next three months living solely on Bitcoin.

The Life on Bitcoin Kickstarter launched in 2013, four years after the elusive Satoshi Nakamoto had published his treatise on Bitcoin and then walked away from the entire project and dissolved into anonymity. The timing of the film is also important, as it came right after Bitcoin had rallied and crashed and critics proclaimed that the currency was dead. But as Austin points out, “A lot of people were saying Bitcoin is dead, but it was ten times more valuable than before the rally started.” He continues, “I learned enough to know that this was a revolutionary technology… it was essentially a pandora’s box. There was no way to close it up and pretend it didn’t exist. Bitcoin wasn’t going away.”

And how did Beccy feel about Austin’s desire to be involved in a documentary about cryptocurrency? As Austin says, “To my great amazement when I asked Beccy about it she was onboard.”

The rules of the Life on Bitcoin documentary were relatively simple: Bitcoin would be the only medium of exchange permitted for all financial transactions made by the couple for 90 days. All cash, credit, and debit cards were to be confiscated and phones, internet, and any other accounts not currently set up to accept payment with Bitcoin would be shut off as well.

The Craigs have become modern pioneers in the world of cryptocurrency.

Each transaction made would also be limited to include only the buyer(s) and the seller, without a middleman exchanging US dollars for Bitcoin. For this experiment to really work and prove Bitcoin’s value as a form of real-world currency, it would need to be as practical as possible.

Using a third party to exchange Bitcoin for USD, and then giving the USD to the seller would be a mere currency exchange rather than an actual transaction of money in exchange for goods or services. So an intermediary was only permitted for transactions after all other avenues had been attempted.

Since Utah is a tightknit community where its members care for each other often without being asked, there were also rules placed on the ability of family and friends to help out the couple. Unless the family or friends in question had legitimate commercial businesses, they would not be allowed to assist the Craigs. The only two exemptions to these rules were payroll taxes withheld from the couple’s paychecks, and of course medical emergencies.

To keep the experiment both interesting and applicable to the real world of Bitcoin transactions, the experiment was set to grow as the Craigs achieved success. If the couple proved that they were able to master the art of using Bitcoin to pay for food, rent, internet, and all other bills in Utah, then the limits would be pushed to include interstate travel and then international travel.

Thanks to Austin and Beccy the small town of Provo, Utah has now become a Bitcoin haven. 

Crypto Pioneers

Both Beccy and Austin come from a heritage filled with religious pioneers who escaped tyranny and oppression from the Federal government by packing up their wagons and trekking from the East Coast all the way to the mountainous desert of the Salt Lake Valley on foot. It is extremely appropriate then, that the Craigs have become modern pioneers in their own right, venturing out into the uncharted territory of cryptocurrency and escaping the centralized banking institutions and their government partnerships that have brought us such financial catastrophes as the Great Depression, the Savings and Loan Crisis, and the Housing Crisis of 2008.

But Beccy and Austin were not the first to attempt such a venture. Prior to the Craigs, Bitcoin adventurer, Senior Online Editor for Forbes and self-proclaimed privacy pragmatist Kashmir Hill decided to conduct a smaller scale experiment, using only Bitcoin for one week in San Francisco.

Many might assume that San Francisco would be a more successful venue for this cryptocurrency experiment than Provo, Utah. But at the time Hill conducted her experiment, there were just not enough individuals using Bitcoin as a means of everyday currency and its value in USD was extremely volatile. As Dan Kaminsky, a network security researcher and Chief Scientist at Whiteops Security points out in Life on Bitcoin, “You want people exchanging currency as fast as possible. The faster they can spin that money around, the more wealth the overall society has.” But in the absence of a local Bitcoin community, living off the cryptocurrency for a week was nearly impossible.

In the film, Hill explains having to move out of her apartment after failing to convince her landlord to accept the cryptocurrency as payment. Hill also speaks of losing five pounds from not being able to pay for food with Bitcoin.

But while San Francisco is what Hill refers to as a “tech mecca,” the small town of Provo has surpassed the silicon valley in becoming its own cryptocurrency haven thanks to the Craigs.

After successfully convincing their landlord to accept rent in Bitcoin, the next priority for the Craigs was finding wifi. Since Bitcoin transactions rely heavily on wifi in order to transfer funds, having fast internet, as well as smartphones, was essential.

Once this need was met, the couple moved on to finding a gas station and a grocery store that would take their digital money. After several attempts, the couple was finally able to meet their needs as well as convincing several local restaurants into joining their experiment and taking Bitcoin as payment. In addition to getting a traditional grocery store on board, they were also able to convince several local farmer’s market vendors to accept Bitcoin, as well as community supported agriculture (CSA) projects.

Bitcoin continues to build its own reputation and relevance in the face of critics. 

The only financial obstacle the Craigs were not able to remedy with Bitcoin was the parking ticket they got while filming the documentary. The judge, however, allowed them to postpone paying the fine until the documentary was completed.

These local victories were somewhat short-lived however, as Beccy and Austin would now have to move on to the next challenger: cross-country travel and international travel.

While the Craigs succeeded in completing both a road trip across the country and traveling abroad, it would have been almost impossible for them to do so without the support of other early Bitcoin adopters who were also using the currency whenever and wherever possible.

Whenever the Craigs found themselves in a bind as they traveled outside the state and the country, there were always members of the Bitcoin community who were more than willing to assist the couple with whatever they needed.

Even as Austin and Beccy found themselves without transportation in Singapore, a local Bitcoiner was able to come to their rescue and help, reiterating the important role communities play in the adoption and expansion of cryptocurrencies. After their international trip was completed, the couple had spent a total of 101 days living solely on Bitcoin.

What Happens Next?

When the internet was starting to become a household commodity in the mid to late 1990s, critics scoffed and brushed off this revolutionary technology as a fad. Even economist Paul Krugman wrote an article saying:

“The growth of the Internet will slow drastically… By 2005 or so, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine’s.”

It should shock no one, then, that Krugman has also been an avid critic of bitcoin, lambasting those who are encouraged by its advent, even writing an article entitled, “Bitcoin is Evil.”  But while economists and central planners sit in their ivory towers condemning the use of a currency that, if successful, would diminish the need for the existence of central authority, Bitcoin has continued to build its own reputation and relevance and the Craigs have been major contributors to this cause.

While the Craigs have no regrets, they do admit that as of now Bitcoin is “not ready for primetime.” But this doesn’t mean that Bitcoin should simply be ignored in its infancy. In fact, without early adopters, the cryptocurrency would never have made it this far.

Sure, we may be years away from going to Starbucks and exchanging Bitcoin for our morning coffee, but that doesn’t mean Bitcoin has no relevance in our current world, nor does it take away from the impacts Bitcoin is already making.

In underbanked regions of the world, where banks are a luxury not afforded to the most impoverished, individuals are finally able to participate in the global economy of which they have been excluded for too long. Likewise, those sending money across borders to family members are now able to do so in Bitcoin to avoid costly service fees and currency exchange rates.

Bitcoin and other cryptocurrencies are changing the way individuals conduct financial transactions with each other. Governments have slowly taken our most precious rights to privacy away from us. Our bank accounts serve as self-incriminating logs of all our habits and vices, but the blockchain and cryptocurrencies are taking back the power by allowing individuals to make exchanges without government interference.

As Jeffrey Tucker says, “There is a chance that Bitcoin will give new life to the old-fashioned idea of the brotherhood of man from which nobody is excluded,” he continues, “This isn’t about people buying cool things on the internet; this is about the whole of humanity coming together and the great project of building prosperity.”

Reflecting on the experience, Austin said, “Even though we didn’t know if this would be possible, if we would really be able to live on Bitcoin we knew that even trying to do that, even the attempt would give us enough material to talk to a lot of people about Bitcoin.”

Without crypto pioneers like Beccy and Austin, Bitcoin would have never obtained the level of success it already has. It takes individuals, and the communities those individuals make up to change hearts and minds.

And as Austin says, “This movie is a bit of a trojan horse. People come to this to see the adventure of a young newlywed couple living on internet ‘funny money.’ But our goal, and my belief is that once people watch the movie, once the credits start rolling, they will understand the potential of Bitcoin and the implication of this technology that will be touching everyone’s life in the very near future.”

Gross Output Is The Metric That Contradicts Keynes.

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We are all familiar with the government’s preferred measure of economic activity, which is GDP or Gross Domestic Product. It is a measure, primarily, of consumption. It’s preferred because it fits Keynesian theories about the role of government and the rationale for interventionist “stimulus” measures by central planners. The theory, in essence, goes like this: (1) consumption is the driver of economic activity; (2) when economic activity stalls or slows, it’s because there is a lack of consumer demand; (3) if the government puts more money in the hands of consumers, that will fix the problem; (4) government can do that by printing money, redistributing wealth and income from rich people who save to less rich people who spend, or taxing business to divert resources to consumers, or going into debt and diverting the debt proceeds to consumers, or creating government projects where workers can earn wages for doing government work. Of course, they do all these things.

The truth is the opposite. We must produce before we consume. In a healthy economy, business drives economic activity by building capital goods, making things, developing services, innovating and hiring. Consumer spending is a result of business activity, not a cause. Left to their own devices, without government intervention, businesses will generate a healthy growing economy.

What gets measured gets managed. Government measures GDP and then gears up its multi-pronged interventions when GDP growth lags.

But we can measure economic activity the right way, reflecting business activity not consumer spending. Professor Mark Skousen is the great proponent of the true measure of the health of the economy, Gross Output or GO. Here is aa recent article of his that appeared in the Wall Street Journal.

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The Bureau of Economic Analysis will release its preliminary first-quarter growth figure on Friday. According to the Atlanta Fed consensus tracker, economists are predicting gross domestic product to have risen at a meager 2% annual rate. But a powerful behind-the-scenes indicator suggests the real rate may turn out to be significantly higher.

“Gross output,” or GO, reflects the full value of the supply chain—the business-to-business spending that moves all goods and services toward the final retail market. Based on my work and research by David Ranson, chief economist at HCWE & Co., changes in the supply chain are a strong leading indicator of the next quarter’s GDP.

The supply chain, which the BEA calls “intermediate inputs,” took off in the fourth quarter of 2017, growing at a 7.5% annualized rate. That’s more than double the rate of real GDP growth and the fastest pace since before the Great Recession. Real GO, which includes both GDP and the supply chain, rose at a 4.7% rate. The growth was broad-based, with strong numbers in mining, manufacturing, utilities and construction. The fourth quarter 2017 GDP growth rate of 2.9% did not reflect the dramatic increases in intermediate outputs because GDP by definition measures only spending at the end of the economic chain.

The GO model is more in keeping with the Conference Board’s list of 10 leading economic indicators, which are linked to manufacturing and capital markets. For three quarters in a row in 2017, GO accelerated, probably due to the anticipated tax breaks and deregulatory environment. The boom in intermediate business activity should translate into higher economic growth soon, barring international instability, trade wars, or tighter-than-expected monetary policy.

As I noted in these pagesin 2014, measuring gross output is a breakthrough in national income accounting. By reporting GO as well as GDP, the BEA has helped economists catch up with the accounting and finance professions. Public companies have long reported the top line (revenue) and the bottom line (profit) at the same time each quarter. For a national economy, GO corresponds to the top line (total activity) and GDP to the bottom line (final product). As the economists Dale Jorgenson, J. Steven Landefeld and William Nordhaus wrote in a 2006 book: “Gross output [GO] is the natural measure of the production sector, while net output [GDP] is appropriate as a measure of welfare. Both are required in a complete system of accounts.”

GO also dispels the popular Keynesian myth that consumer spending is the driver of economic growth. For example, the New York Times recently warned: “With personal consumption accounting for nearly 70 percent of all economic activity . . . the administration will be hard pressed to lift growth substantially if consumers remain cautious about opening their wallets.” But GDP is an incomplete measure of economic activity. It overlooks the value of all goods-in-process, which amounted to more than $14.7 trillion in 2017.

The broader-based GO highlights the reality that business spending is actually substantially larger than consumption. Consumption is 69% of GDP but just 39% of GO, while business spending is 17% of GDP but 52% of GO. This model therefore better recognizes the vital contributions of entrepreneurship, capital investment and innovative technology. As Larry Kudlow, the new director of the National Economic Council, wrote in 2006: “It is business, not consumers, that is the heart of the economy. When businesses produce profitably, they create income-producing jobs and thus consumers spend. Capital formation is the key to worker productivity and consumer prosperity.”

The first-quarter 2018 GO release won’t come until July 20, but BEA director Brian Moyer says the agency plans to release both GO and GDP at the same time within the next year or two. Hopefully by then the media will catch on to this advance in supply-side national accounting and leading indicator of robust economic performance.

 

Mr. Skousen is a presidential fellow at Chapman University. He introduced gross output as a macroeconomic tool in his book “The Structure Of Production” (New York University Press).

Appeared in the April 24, 2018, print edition of Wall Street Journal.

 

Five Real World Examples of Spontaneous Order

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Commenting on spontaneous order, Hunter Hastings once wrote:

“As humans, we are a product of spontaneous order, specifically of a version of spontaneous order that we call evolution. With no plan and no planner, innovations (genetic mutations) occur randomly, are tested in the marketplace of survival, and the most successful going forward. The outcome has been beneficial for the entire species.”

This concept of spontaneous order, or emergent order as it is sometimes called, was made popular by economist F.A. Hayek who believed that the economy was far too complex for one single individual to comprehend. But this concept often frightens those who think that governments should be regulating and controlling the market.

What many fail to recognize is that spontaneous order not only exists in the marketplace, examples of it exist all around us in the real world. The following are five examples of spontaneous order appearing in everyday situations.

Music Festivals

At music festivals, where alcohol is sold in abundance, predators come in the form of rowdy dancers who may not be completely aware of their surroundings. But again, without any preplanning, the crowd is able to swerve and sway and hold space in order to protect themselves. And while it appears to be done as a group it is not. As Strogatz says, “Even though it looks like they’re thinking as a group, they’re not.” Read more about spontaneous order existing all around us here. 

Ridesharing

When the sharing economy began rising to prominence in the marketplace, it was virtually unregulated. Its existence was born of the consumer’s desire for higher quality transportation.

Prior to Uber and Lyft, consumers were not left with many choices when it came to hailing a taxi. Cabs had been the only game in town for over 80 years. The traditional cab companies had not had to deal with competition before, therefore, they had no real reason to innovate.

But this void in the market left a natural opening for spontaneous order to occur. Without asking for permission, companies like Uber and Lyft were able to grow their own free market legacies. And the consumers were grateful. Read the full article here. 

Band Practice

During my formative years, I had a front row seat to many “jam” sessions as they were called, where spontaneous order was all around me.  

Without planning or structure, I would watch my friends make incredible music. The drummer would be keeping the rhythm while the two guitarists wailed on their instruments. The bass player keeping harmony while the singer made up lyrics on the spot. Each session lacked order and structure, and it was absolutely fabulous.

It always fascinated me that five individuals come together without a plan, and still manage to make incredibly sounding music. The answer for this, I would later discover, came from the economic principle of specialization. Read more about bands and specialization here. 

Language


The ability to form complex languages is what separates humans from all other living species.  And language, like markets, spontaneously derive from necessity, whether of a good or service or of communication. And just as humans are anxious to exchange money for desired goods and services, so are they eager to communicate with others to facilitate the exchange of ideas. But neither scenario requires any action from any central authority.

The English we speak today is different than the English used by our Founding Fathers. But these organic changes occurred in the absence of a central authority controlling and dictating the terms. And yet, considering all this, somehow we are still able to communicate with each other. Read more about the English language and spontaneous order. 

Ants

Just as humans have spontaneously created language as a means of guiding our actions in cooperation with others, so have ants learned to communicate with each other to achieve the most productive possible results. Rather than obeying some central authority, as is often believed, ants rely on pheromones and hydrocarbons— described by the dictionary as being “a compound of hydrogen and carbon, such as any of those that are the chief components of petroleum and natural gas.” In short, these signals serve as a language used between these ants to communicate with each other.

It is this system, or lack thereof, that has allowed these resilient creatures to survive, albeit to the dismay of many annoyed humans. Since each ant is armed with its own knowledge of the environment surrounding them, they are best suited to warn others. If there were a leader of an ant colony, this survival system would crumble to the ground because one ant, just like one single person, is incapable of knowing everything.

It seems almost silly, then, that the animal kingdom is wiser than humans when it comes to emergent order.

Read the full article here. 

Blockchain Could Completely Reshape the Human Resource Sector

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Blockchain technology has the potential to completely change our day to day lives. And while many people view the blockchain only as a platform for cryptocurrencies, there is so much more to it than that

In fact, many entrepreneurs are using blockchain technology to completely reshape certain industries. Smart contracts facilitated via the blockchain, for example, have the potential to cut out the need for any mediator or middleman when it comes to enforcing signed contracts. Until now, third parties were always needed to facilitate the terms of a binding agreement. This usually meant having to deal with mediators and lawyers to make sure that both independent parties lived up to the terms of the arrangement.

But now, innovators are moving this outdated model to the blockchain. In the digital space, an algorithm is responsible for enforcing the terms of an agreement, rather than a human being. And while this has the potential to change how we have previously thought of formal contracts, this is just one example of how blockchain can positively disrupt certain sectors. And with this disruption comes the opportunity for entrepreneurs to cash in on new opportunities for innovative concepts. One example of this comes from the company, The 4th Pillar.

Disrupting the HR Sphere

The 4th Pillar believes it can reduce the human component of human resources by moving many HR duties to the blockchain. Currently, the primary task of HR departments is to ensure that professional profiles of various employees are maintained as well as making sure that each employee receives their compensation in a timely manner. But with the blockchain, all this can be can be stored and managed digitally. 

We already know though that blockchain is making it easier for individuals to send and receive money at much lower rates than traditional financial institutions. Not only is this more convenient for its users, it also has a certain amount of anonymity around it as well, something banking institutions cannot promise.

The 4th Pillar would act similarly, as far as sending payroll checks to workers is concerned, but it can actually do much more than that. Bringing HR functions to the blockchain would also allow the company to streamline the recruitment process, making it easier for both the employer and the employee.

As explained by the Bitcoinist:

“The 4th Pillar plans on replacing CVs, old-school references, and clunky databases with its next-generation all-in-one platform. Work-related documentation can be securely sent and organized, as well as controlled directly by the user.”

Since the user controls his or her own information, they will be able to manage the data that is stored on the blockchain, as well as build their savings and their professional identity, making networking easier when the time comes to find a new job. On the employer’s end, they will be able to manage payroll payments, manage confidential data, and reward employees for their achievements, all via the blockchain.

But what is perhaps most exciting about this new frontier of human resources is that it will make job recruitment far easier than ever before. As the Bitcoinist explains:

“Lastly, recruiters will now have the ability to comb databases, check verified work history against an immutable ledger of activity, and throw out their traditional, clunky documentation processes.”

How Does it Work?

The 4th Pillar will be fueled by the organization’s own token called, the FOUR Token and powered by Bokky’s token teleportation service, a site that facilitates smart contracts. Once the FOUR token is used to gain access to the platform, funds can be sent out in any value that is most convenient to the user. While the FOUR token holds its value mostly within the realm of the 4th Pillar, it is hoped that internally it can be used to incentivize early adopters to sign on to the concept.

The company plans to have its development process complete over the next three years. It ultimately hopes that it can add more user-friendly features, like a digital wallet, the ability to distribute documents, and other management features. But what makes this entire concept intriguing is that it was designed by those who have spent their careers in the HR world.

While the product itself has not fully launched yet, it is well out of the conceptual stage. In fact, the 4th Pillar already has early adopters who have signed on to use the product. And while it may not be helpful to those who are already confused by the intricacies of Blockchain technology, the 4th Pillar has put together the following graphic to help explain how it all works.

 

Why Does This Matter?

When the internet went mainstream, entrepreneurs were given even more opportunities for innovation. Not only did this connectivity create demand for entirely new sectors, it also allowed for new ways to advertise to a wider audience.

As the blockchain begins to be embraced by more people, it is opening up a new frontier for entrepreneurs. The 4th Pillar is just one of many organizations that have identified a way in which the blockchain can be used to make our lives easier and more efficient. 

Let’s Think About A World Without Institutions. Software Can Take Us There.

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Institutions decay. They become corrupted, sclerotic, and detrimental to progress. This causes people to despair, lose trust and become pessimistic about the future.

Let’s, instead, choose optimism, and look for the disruptive model. Here’s one: No institutions at all.

Here’s our starting point:

Institutions are organizations, customs and norms of behavior that mediate between individuals and society. They are mechanisms of social order, asserting rules that are designed to govern how we act. Who designs them? Other humans, who have a vested interest in being the ones who govern. Institutions exist to limit what sociologists call “agency” – the principle that autonomous beings (that would be us) are capable of acting and making decisions by themselves. Once established, institutions tend to become frozen and locked, because their designers prefer to maintain the status quo of governing others, rather than keep up with the innovation and change that goes on beyond their boundaries.

Mediation.

The function of institutions is to “mediate”. A representative legislature is supposed to mediate between individuals and the leviathan of government (an impossible task). Financial services institutions like banks mediate between individuals who wish to use money in economic exchanges and the monopolistic issuer and regulator of that money, the government. Money itself is an institution, mediating between the individuals on two sides of an exchange and solving the problem of mutual coincidence of needs. Stock exchanges mediate between individual buyers and sellers of equities via a regulated platform. Common law is an institution to mediate between individual disputants on opposite sides of contracts. (Unlike legislation, which is a manufactured coercion favoring one special interest group over another.)

The central planners and establishmentarians tell us that our civilization can’t operate without institutions. Until now, we have been able to disagree in theory, but unable to point to any alternative practice.

Disintermediation.

However, the practice is now emerging in the concept of technological disintermediation. Here’s a way to think about it in the specific field of finance: what if financial services institutions were all replaced by software. In fact, financial services will become  software. There will be no institutions needed, and none will survive.

We conducted a thought experiment to ideate what the consumer experience would be like, and distilled it into a FROM-TO table. In the FROM column, we included findings published by EY and Deloitte, and commentary from The Motely Fool, LLC. In the TO column, we reflected the predictions and expectations of financial services experts interviewed in The Interconnected Individual.

FROM

Our Feelings About Institutional Financial Services Today

TO

How We’ll Feel About Financial Services As Software
We have to deal with a bureaucratic institution with all its frustrations. It’s an app on a mobile device, with the same digital experience as any other.
All our transactions are intermediated—a 3rd party decides what’s permitted and proper. Peer-to-peer, self-initiated, self-controlled, every decision is our own.
We expect high cost fees and commissions, often set at deterrent levels. We will experience low costs, limited to typical digital norms.
We expect slow speed (often days, sometimes weeks) with a lot of friction. Transactions will feel instantaneous or close to it, smooth and frictionless.
We feel like the institutional intermediary is a weight to carry, a drag on commerce. We experience a lightweight, burdenless enablement of our dealings.
We have to endure offline elements—like phone calls, branch visits. 100% online, on our device, at the place and time of our choosing.
We know there’s a high privacy risk in dealing with the 3rd party and their legacy systems. We expect high privacy.
With low privacy comes low security—we live in fear of identity theft and account hacks. We expect greater security—with control over our private keys.
The many barriers institutions raise—e.g., to “accredited investors”—result in a closed, noninclusive services ecosystem. Software financial services on the blockchain do not discriminate.
In the end, we feel that dealing with institutional financial services is not cost effective—high costs with lots of inefficiencies. We feel that dealing with software financial services is highly cost effective—lowest costs with lots of effectiveness benefits.

 

Caitlin Long is one of the most advanced thinkers in the space of financial services as software. She sees decentralization and disintermediation as the central themes of blockchain revolution in financial services.

It’s all about bringing power back to the individual and giving them control, escaping from reliance on big institutions. The central theme of blockchain is decentralization, devolving power back to the individual and enabling individuals to interact with each other directly with total trust even though they don’t know each other in advance.

Decentralization is true to the ethos of disintermediating institutions. All nodes on the blockchain are equal, which means that no party has more control, or different rights, than any other party. The laws of math, not of man, govern the network.

Institutions: Who Needs Them?

We can anticipate that big banks will no longer run big, highly leveraged balance sheets that lay taxpayer-subsidized risk onto the financial system. Companies will make direct offerings of securities, without the need for a stock exchange and the broker-dealers who trade the stock for their own profits. Blockchain will automate regulatory compliance, and give small businesses direct access to credit by pledging collateral without the need for an intermediary bank to vouch for them. Crypto-currency on distributed ledgers will replace central banks and other centralized institutions that pervade the financial system today.

Regular folks will question what central banks really do. If distributed ledger technology creates trust with software, then why do we need central banks? Why do we need the DTC, CLS Bank, the Clearing House and other powerful centralized institutions at the heart of capital markets if they don’t add value and instead create cost, delays, and counterparty risk where these would not otherwise exist?

These institutions did not exist at one point in the past, and we won’t need them in the future.

And then, having done away with financial institutions, we’ll start to question the need for the institution of government.

Will the Market Adjust to Accommodate the Young Professionals Workforce?

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Since 2014, the “gig economy” workforce has grown three times as fast as the traditional workforce. A major reason for this shift is that for the first time in history, young professionals are able to earn a living by doing what they love, rather than simply doing what they need to do in order to receive a paycheck.

In a previous installment of the “Road to Individualism,” I discussed how technology has made it easier for younger professionals to practice specialization and thus, individualization, in the workforce. Since the internet has allowed us to connect with diverse people from all over the globe, it has become easier than ever for consumers to express their demand and easier for producers to respond accordingly.

From Etsy to Patreon, entrepreneurial young people are finding ways to earn money by pursuing their individual passions. But this ambition to do what they love is deterring young professionals from entering the traditional workforce. And unless the business world adjusts to meet these demands, we may see a decreased number of people wanting to be strapped to a desk from 9-5 each day.

Meeting Employee Demands

Just like producers must meet the needs of their consumers in order to stay afloat, so must employers adjust their offerings in order to appeal to prospective employees. But currently, this is not happening. Many traditional employers are expecting tech-savvy young people to mold to their version of business as usual while failing to see how the gig economy has redefined the demands of the modern American employee.

According to Linkedin, over the next decade, “gig” workers are expected to make up the majority of the entire workforce. In 2017, 57 million people qualified as participants in the gig economy, according to the Upwork and the Freelancers Union. But what does this mean for employers?

If I were a producer selling a product no one wanted, I would have to adjust if I wanted anyone to attract any consumers. But even though the traditional workforce is depleting, the business world is still struggling to adjust their models to cater to the young professional.

Many of today’s young Americans are entering the workforce already burdened by debt. As student loan debt has now surpassed the amount of credit card debt held by Americans, it is no surprise that many young people work more than one job.

In addition to debt, many young Americans are graduating from college and realizing that their degrees do not do much to secure a job in the real world. This has led many to utilize the sharing economy, either in times of career limbo, or to supplement their income.

New opportunities like Uber have made it easier to earn extra money, but the gig economy has also enticed young Americans with a new type of employment model where they can work as they please.

The Outdated Office Model

Historically, a steady 9-5 job was the staple of a successful professional life. But now this is changing. Many young people are realizing that the typical 9-5 workday is incompatible with individualism. If an employee is creating value for their organization, it should make no difference what hours they work so long as the work is done.

Likewise, technological advances no longer make it necessary to be in an office setting from day to day. Skype and other video call platforms make face to face interaction easier than ever. Platforms like Slack make real-time communication with coworkers as easy and as entertaining as communicating Facebook. Yet, many employers are still hesitant to give their employees the freedom to move towards a more flexible workplace model. And as a result, young people are simply rejecting the outdated office place model.

When Upwork asked workers why they chose the freelance model to the 9-5 office model, 87 percent said it was a matter of independence. In fact, many also responded that there was no amount of money that would convince them to take a regular office job instead of freelancing.

While the workplace is a voluntary obligation, it is also one that is not immune to market demand. If organizations want to appeal and retain younger employees, they will need to adjust their models to meet the needs of individual employees.

The Real Reason Tax Day Was April 17th This Year

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This past Wednesday was the last day for Americans to file and pay their taxes without being penalized by the IRS. Of course, the original deadline was supposed to be Tuesday, April 17th, but the department’s website crashed early that morning, forcing the IRS to move the deadline to Wednesday. However, the true bureaucratic nature of a large government agency like IRS was put on display, as those attempting to use the site were shown this error message.

Not only does the “planned outage” promise to be back in time for New Year’s Eve 10000, but the additional text below contradicts that date, telling users the site will be available on Thursday, September 22, 2016. And while we are currently in the year 2018, making both of those dates completely unhelpful, the site also warned taxpayers that their taxes are still due, even if there is no way to pay on the site.

But blunder aside, April 17th, the original deadline planned for this year, is also not the date typically associated with tax day. Historically, April 15th has been the day that Americans dread all year long.  And while most of us were relieved at the prospect of having a few extra days to worry about getting our taxes filed, few of us bothered to ask why Tax Day had been moved.

Switching Tax Day from its typical April 15th date is not completely without precedent. When April 15thfalls on a weekend, the federal government will typically move it to the following business day. This year, tax day fell on a Sunday. But you will notice that that would have pushed this year’s deadline to Monday, April 16th, not the following day.

However, if you work for the Internal Revenue Service, which just happens to be located in our nation’s capital, the 16th of April is a holiday. During Abraham Lincoln’s presidency, April 16th was instituted as Emancipation Day in the District of Columbia. Recognized only within the geographical limits of Washington, D.C., government employees working in the district are given a paid day off.

Not wanting to miss out on this holiday that literally no one else in the country celebrates, IRS employees took the day off. Thus, when looked at objectively, the federal government extended the tax submission deadline specifically so it could take a paid day off.

Recently, it was reported that the IRS has only been able to answer a very small portion of the calls it receives from taxpayers with tax-related questions. That means that many Americans have been unable to get the information they need from the IRS in order to file their tax returns. It would be nice to think that the federal government had decided to extend the tax deadline as a favor to the American people, or even as a way of apologizing for the bureaucratic hurdles the taxpayers had to climb over just to reach an IRS representative, but that is not the case.

In fact, both Maine and Massachusetts celebrate, “Patriots’ Day” every April 18th. Though you might think that residents of either of these states would also have an additional day to submit their taxes, you would be mistaken. Since both states have residents who are paying taxes to other states, who do not recognize Patriots’ Day, Maine and Massachusetts residents are still required to meet the new April 18th deadline.

Not that anyone should really be shocked by the government’s hypocrisy in regards to Patriots Day, nor should Americans be shocked that the federal government jumped at the chance of taking a paid day off.

As Henry David Thoreau once said, “That government is best which governs least.”

Exponential Growth In Entrepreneurship: #2 Interconnectedness Is The New Innovation

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It is easy to dismiss the social media fascination of today’s young people as a misaligned priority and an escape from productive work. Out-of-touch U.S. Senators try to decide how to legislate against it, without a scintilla of understanding of the phenomenon.  Unbeknownst to them, there is a deep idea behind social media that will accelerate and elevate innovation and entrepreneurial productivity.

A new definition of entrepreneurship is now emerging. Entrepreneurship is no longer the linear, sequential, pre-social media idea of finding a market gap and filling it, or finding a consumer dissatisfaction and solving it. Entrepreneurship lies in interconnecting people, knowledge, technology, ideas and actions so that new innovations emerge. It is the interconnecting itself that constitutes entrepreneurship.

In other words, individual entrepreneurs do not start with a brilliant and disruptive business idea.  They start with connections.

The First Collaborative Car.

Recently, thousands of people from all over the world came together to design a new car. The context was a development project called “Fiat Mio”- “the first collaborative car.” It was a deliberate attempt to overturn the traditional development process by interconnecting as broad a network of people as possible to gather and shape innovation ideas. Thousands of ideas from over 100 countries were gathered, and integrated into a new car launch. Moreover, all the ideas were placed in Creative Commons, so that they remain available to all, a complete inversion of the traditional route of secrecy and patent protection. The Fiat Mio project started with connections, with no end result in mind.

The new paradigm starts with economic actors assessing their own knowledge (“What Do I Know?) and their own network (“Who Do I Know?”) and then using devices to interconnect with new knowledge or data, and with other knowledgeable actors who might be able to supplement the data or may have ideas on how to use the data in new ways. It’s an entrepreneur-centric system in which the individual takes responsibility for compiling their own data and then connecting to others to act upon that data. For example, if you are managing your own healthcare entrepreneurially, you will take charge of compiling your own healthcare records and then assemble your own network of doctors and clinics and pharmacies and insurance providers to act upon the data in those records.

Knowledge Is Now Social.

We are used to thinking of knowledge as expertise, something on which an expert holds some kind of specialist monopoly. We might think of college professors, or doctors or chefs as experts – trained, specialized, career-long accumulators and protectors of scarce knowledge. No longer. Now knowledge lies in the social domain. We can collect our own knowledge through interconnection – with online sources, with peers who have relevant experience that they will share, with communities who give knowledge support. The entrepreneur is active in collecting, curating and interpreting the knowledge that is available.

Control Has Shifted.

Now that experts are no longer required, the entrepreneur is more in control. The individual can choose and manage his or her interconnections, pursuing those that yield the most assistance and productivity and collaboration. Building and nurturing the right portfolio of interconnections – the right social media network, if you will – becomes an important entrepreneurial skill.

The Expertise Of Innovation Has Shifted.

Innovation used to be thought of as a scientific or technical process competence of skilled innovation producers who “bring new products and services to market”, or “introduce” or “launch” new initiatives. These are all linear concepts. Now that knowledge is social rather than scientific, innovation becomes a social competence practiced by those who are good at social networking. Innovation is socially embedded co-creation. The social network can include people, knowledge, devices and software. It is socio-technical. Entrepreneurial innovation is the continuous co-construction and co-creation that results from individual sharing across networks of actors, actions, contexts and resources. It’s an emergent outcome, not a planned or designed outcome. There is no breakthrough action or aha! moment of one R&D lab or one company or one inventor.

The 4 Practices Of Social Media Maestros

Social media maestros (a word that is derived from Italian meaning to orchestrate with others to create a successful collaboration) can bring together different people, who have different expertise, and create a successful venture. They are masters of the 4 practices that the new innovation requires.

Engaging: connecting people who are seeking opportunity to co-create innovation. These people could be designers, thinkers, engineers, inventors, teachers, or parents, or play in any one of a myriad of roles. They have talent and interest in innovation, they want to collaborate and share and develop ideas and projects. Engagement is the practice of expanding the variety of actors and roles in any collaboration to capture new possibilities for novelty.

Exploring: the continuous dynamic of knowledge creation and recombination through shared interaction – knowing and learning together. This is where problem solving occurs, through interconnected creativity, knowledge and competency.

Collaborating: the combination and transformation of knowledge in new contexts, seeking ways to re-use and re-combine knowledge and technologies in new ways. Collaborators modify and extend their concepts into new opportunities, translating knowledge in new ways and developing commercial concepts.

Orchestrating: ensuring, out of all the possibilities, the best flow of actions and resource integration. Orchestrators frame the network of collaborators to promote the most effective linkages and connections, mobilizing individuals to increase their personal empowerment and confidence, while also fostering community level speed and alignment.

So let’s not disparage those engaged in social networking. With these 4 practices, they are leading the world towards a new and more productive form of entrepreneurial innovation.

 

 

 

Female Entrepreneurs Are Taking the Lead in This Burgeoning Market

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Now that the legalization of marijuana is becoming more commonplace, an entirely new economic sector has sprung up in several states across the country. Legal cannabis is creating new opportunities for entrepreneurs to get in on the ground floor of an entirely new market. But one thing that is particularly interesting about this burgeoning sector is its appeal to female entrepreneurs.

One unique fact about marijuana plants is that they can be either male or female. But only female plants can yield the “bud” that both black and legal markets seek. It is almost poetic, then, that women are playing such a large role in pioneering the legalized cannabis industry.

The possibilities that come with this new green economy are nearly limitless. Dispensaries, grow houses, and supply stores are just a few of the businesses that have been and will continue to be developed as legalization spreads throughout the country, but this doesn’t even include the possibility of hemp and all the products derived therein, not to mention the various medical uses that can exist separate from the recreation world. The economic potential is huge, and female entrepreneurs are not missing out on what some economists are calling the “green rush.”

According to research done by Marijuana Business Daily, 36 percent of the industry’s executive positions are held by women. On its face value this may not appear to be a giant leap forward for womankind, but when compared to other fields it becomes obvious that there is something truly unique about women in the marijuana industry.

In the traditional medical industry, for example, women only hold 14.6 percent of the executive positions, almost half of those in the legal cannabis market. But the numbers only get better from here. When it comes to the testing and lab work fields of the green market, women hold 63 percent of the executive positions. Unlike other market sectors that were around long before females were even permitted to hold such high-level positions, legalized cannabis is the first industry in the country where female executives are actually in the majority.  

Why?

Women have been trying to overcome professional hurdles since they first entered the business world. However, since societal norms were not always so accepting of females having a life outside of the home, women were late to the game, so to speak. Of course, this made breaking into the professional world incredibly difficult as all the high-level positions were held by men who had already established their careers.

However, the legal cannabis industry is a Tabula Rasa. The entire sector is a frontier of possibilities without any pre-existing prejudices. For women especially, this opportunity is a game changer and one that, as Newsweek hypothesizes, could make the legal cannabis industry the “first billion-dollar industry not dominated by men.”

While stricter regulations are sure to come in the next several years, in the early days of weed legalization, much of the potrepreneur world is learning along the way. But without a pre-established set of rules dictating who can and cannot enter the market, it is really a matter of trial and error, and for some reason, women are also more willing to take risks in this field than men.

Without the barriers to entry that exist in other formerly established industries, women have been able to get in on the ground floor and are starting businesses that are truly unique to the female perspective.

The New Tupperware Parties

Jordan Person, a former nurse and self-described “grandmother of cannabis massage” is the founder of Primal Therapeutics, a cannabis-infused massage therapy business. In Colorado, where Person’s lives, the recreational sale of weed is completely legal. However, public consumption is not. This has led Person, and other women, to utilize what has come to be known as the “Mary Kay” model of business, a thought that never occurred to many male potrepreneurs.

Since Colorado residents can only smoke marijuana on private premises, Person’s entire business is still technically illegal, unless she is giving her reefer rub-downs in private residences. And while this constant movement is not as ideal as having a permanent location, Person does at least save on overhead by making house calls to her clients.

Similarly, Kendal Norris launched the company Mason Jar Events, which specializes in upscale pot-themed parties. Like Person, Kendal’s business also relies on making house calls. These are solutions to problems that women have been coming up with on their own. They have taken a model that originated in a time when women were just beginning to venture outside their own homes by hosting “parties” in the homes of other women. Whether it was Tupperware or makeup, women found a way to create businesses which, at the time, allowed them some freedom from the societal norms that kept them out of bigger sectors.

While these companies were often viewed as “cute” attempts at business female ventures by men, as it turns out, the model itself is now being used in modern times to advance the weed industry in ways many males never even fathomed.

Women aren’t waiting on governments to make their marijuana-based businesses a reality. Instead, they are forging out on their own and taking the risks needed to really pave the way for the cannabis industry to gain relevance in the future.

The 3 Individual And Social Benefits Of Your Entrepreneurial Life.

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We are at the beginning of a new entrepreneurial era, and the benefits for each of us and all of us are magnificent. They’re also numerous and multifaceted, and potentially quite revolutionary. Here is a way to distill them into three meta-virtues.

Control

Entrepreneurs – especially those who follow the principles of Individual Economics – understand that they can’t predict or control the future. The future is defined by uncertainty – we don’t know what is going to happen, irrespective of our own actions. In fact, there is a type of uncertainty identified by Peter G Klein, the leading economist of entrepreneurship, called Absolute Uncertainty. That’s when we have a large set of input options – actions we could take – each of which would generate a large array of possible outcomes. Choosing the inputs and anticipating the outcomes are both uncertain.

Entrepreneurs are individuals who embrace this uncertainty. What exactly does that mean? First, they recognize it as an environmental condition. They know they will never have enough knowledge to resolve the uncertainty. Everything is a possibility, nothing’s a certainty, and most things don’t even have a probability score. Entrepreneurs develop heuristics – decision making short cuts using as much knowledge as possible, but not waiting for certainty. They take action. They think in bets– making as good a bet as possible. If things turn out differently than they prefer, they learn, they re-assess and try another action.

With this pattern of action – assessment – re-assessment – more action, self-reliant individual entrepreneurs can experience a sense of control. The decisions are theirs, the actions are theirs, their attitude to unpredictable events is stable and positive. They choose their own ends, and choose the means they utilize to achieve those ends. They are free to change those means, or to adjust the ends they strive for.

There is no sense of failure, or even possibility of failure. There is a process, an action sequence, a continuous streak of entrepreneurial initiative that generates new knowledge, which, in turn, stimulates new actions. Entrepreneurship is a lifestyle choice.

When we settle for a subsidiary position as an employee in a hierarchical structure, we abase ourselves. We submit to the whims and preferences and rules and assignments and orders of others. We work towards their imagined futures, not our own. When we position ourselves as a node of entrepreneurial service in a network of collaborators and consumers, sharing knowledge, ideas and mutually beneficial service offerings, we elevate ourselves and others. We manage our possibilities by our hard work, our responsiveness to market signals in the network, our ideas and our initiatives.

Opportunity

We are all striving for self-betterment. Entrepreneurship is often described in terms of seizing opportunities. In fact, opportunities do not “exist”. They can only be described in retrospect, when an observer can identify the results of a successful initiative. But the entrepreneur did not know that success would be the outcome. The entrepreneur imagined a possible future, worked hard to attain that future, and made a lot of adjustments along the way. Entrepreneurs create opportunities.

Indeed, creating opportunity is how entrepreneurs navigate uncertainty. The route to success is paved by the needs of others. Every person’s need is raw material and a source of energy for the entrepreneur. Every free market exchange occurs between a willing buyer and an eager entrepreneurial seller. It is because consumer needs always exist that entrepreneurs will always be able to create opportunity.

Fulfillment

When entrepreneurs look for possibilities, they are seeking ways to serve others. An expression of need or dissatisfaction with the current state of things by a consumer is a request to make things better. By offering to serve the consumer, to solve their problem and make their life better, the entrepreneur is creating a just and moral society of dynamic opportunity. The creative entrepreneurial society is directed towards betterment for all. In a society characterized by entrepreneurial order, there is no drive for redistribution, and no negotiation for a bigger slice of the pie among entrenched special interests or classes. There is only mutual betterment. The entrepreneur succeeds if the consumer feels better.

Entrepreneurship, therefore, is the most fulfilling life. It consists entirely of understanding what others want and need, and creating products and services to address those wants and needs. And then observing the results. Success? Then do more good. Not quite what the consumer wanted? Then readjust and try again for their approval. Move closer and closer towards the goal of perfect service for your fellow human beings.

Everyone of us has a hierarchy of needs. When we feel good about what we have attained at one level, we can move up to the next, and tackle something greater – a higher value. The entrepreneur can take the consumer on that journey to higher and higher values. It’s a collaborative climb to the top.

The New Mantra Of Entrepreneurship.

In the past, the life mantra communicated to us by parents and teachers has been something like this: “Get educated, then earn a salary by working for a company and climbing the corporate ladder over time.” The new mantra can be something different:  “Know yourself, establish your uniqueness, then create value by serving your chosen customers in better and better ways.” You will have control over your life, create opportunity and find fulfillment.

 

 

 

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