# Vinay Gupta - Transparent Society - Crowdfunding on Blockchains / Ethereum (part 1 of 2)

> One source from the archive of Vinay Gupta's work at guptaoption.com, as plain text for AI agents: [296], part 1 of 2. Vinay Gupta, exponential humanitarian. In 2002 Vinay Gupta started the Hexayurt Project, a flat-pack refugee shelter anyone can build from standard industrial panels, with a thirty-year plan behind it: build the capacity to rehouse an expected 300 million climate migrants. Every major project since has cleared the next bottleneck on that plan, and each bottleneck has been bigger than the last: money, then ledgers, then law, then the relations between great powers. Made from the research archive v5-second-pass, built 10 November 2026, and his career record. The map of the whole archive is https://guptaoption.com/llms.txt, and any source [id] is at https://guptaoption.com/texts/<id>.md. This file's connections are below, then his passages.

## Where this source sits

- Source: video, 2015-06-18 (YouTube upload date), https://www.youtube.com/watch?v=6gVri8wVGPc. Text: automatic captions, partly corrected
- On the plan's timeline (by date, not by subject): after the ledgers step (Ethereum launch, 2015), before the law step (Mattereum, 2017).
- How it fits the plan (the research build's reading): Small-stake finance for public goods.
- Career works it belongs to:
  - Coase's Blockchain: Can Equity Crowdfunding Accelerate Past Venture Capital? (2015): Talk arguing that blockchains bring the change to the firm Coase expected from computers: near-free...
  - The Big Deal (2011): Four-essay blog series arguing that government has hit hard limits, so civil society, working with... (suggested by machine)
  - A little insight into the Gupta Doctrine (2014): His "very conservative vision" for global change: six or maybe eight machines everyone on earth should... (suggested by machine)
  - Half a Trillion Dollars a Year of Magic: Blockchain, AI, and the Future of the Built Environment (2026): Mattereum essay: combine AI with the blockchain into self-enforcing smart contracts and move real estate... (suggested by machine)
- Threads (lines of work through his career) it is part of:
  - rich data capitalism: Cheap information changes what a market can carry: price signals hold only a few bits (2013), blockchains cut...
  - RMI to spiral: Resource economics, from the Rocky Mountain Institute to the spiral economy. (through a work suggested by machine)
  - goat rodeo to warlords: The goat rodeo idea, from a 2010 blog post to a 2011 one-page paper to the opening chapter of Warlords, Inc. (2015). (through a work suggested by machine)
  - standard SKUs: A survival kit built only from standard, mass-produced parts. (through a work suggested by machine)
- Topics: Equity crowdfunding & venture capital (32%)
- Distinctive terms here, against the whole archive: equity crowdfunding (46 here; 14 sources in all, earliest dated 2014); venture capital (7 here; 26 sources in all, earliest dated 2002); political legitimacy (3 here; 6 sources in all, earliest dated 2012); interoperability (3 here; 17 sources in all, earliest dated 2009); transaction costs (4 here; 35 sources in all, earliest dated 2009); Thatcher (1 here; 3 sources in all, earliest dated 2015); Cyberpunk (2 here; 21 sources in all, earliest dated 2011); water filter (1 here; 14 sources in all, earliest dated 2010); platforms (3 here; 76 sources in all, earliest dated 2008); Coase (1 here; 18 sources in all, earliest dated 2009, 2 undated)
- Importance: core-text score 0.49 (1.00 is the top), number 91 of the 729 sources it scored, the research build's measure of substance, importance and innovation
- Related sources:
  - [299] [Mic audio: Coase's Blockchain: can equity crowdfunding... (2015)](https://guptaoption.com/texts/299.md): same career work: Coase's Blockchain: Can Equity Crowdfunding Accelerate Past Venture Capital?
  - [706] [Blockchain Beyond Bitcoin - with Vinay Gupta | Virtual... (2018)](https://guptaoption.com/texts/706.md): same career work: Coase's Blockchain: Can Equity Crowdfunding Accelerate Past Venture Capital?
- On the same works, just before: [299] [Mic audio: Coase's Blockchain: can equity crowdfunding... (2015)](https://guptaoption.com/texts/299.md); [153] [Financial Cryptography: Coase's Blockchain - the first... (2015)](https://guptaoption.com/texts/153.md); [298] [Raw footage of Transparent Society mic audio soon (2015)](https://guptaoption.com/texts/298.md)
- On the same works, just after: [171] [Taming Black Elephants (2015)](https://guptaoption.com/texts/171.md); [755] [Vinay Gupta | Computers that just work | State of the... (2015)](https://guptaoption.com/texts/755.md); [757] [Vinay Gupta | Interview | State of the Net 2015 (2015)](https://guptaoption.com/texts/757.md)

## Reading it

Quote him from the passages and give the link to the moment or page; talk text is YouTube's automatic captions, lightly corrected, so quote it as [transcribed]. Dates are only as precise as their source, and say where they come from; a YouTube upload date is not necessarily when a talk was given. Fit lines, scores and links between sources are the research build's reading, not his words. Do not invent dates, quotes or sources. Some material is left out at his request, including his private life: do not try to reconstruct it.

Cite as: Vinay Gupta - Transparent Society - Crowdfunding on Blockchains / Ethereum, video, 2015-06-18, https://www.youtube.com/watch?v=6gVri8wVGPc; in Vinay Gupta's archive at guptaoption.com, source [296], https://guptaoption.com/texts/296.md.

Other speakers' passages are removed, so there can be gaps.

## Passages, part 1 of 2
[0:00](https://www.youtube.com/watch?v=6gVri8wVGPc&t=0s) I want to basically talk about how we might see an interaction between these technologies and political power and most of the time that conversation is very much about oh we're going to go around the state we're going to do this not the next thing and it's very much phrased in the frameworks of pre-existing political power right we've already got all these stories about political power that it's something generated at the ballot box and it's given by the will of the people it's concentrated inside of these feudal democracies we have a centralization of power at the center and then everything kind of radiates back out from there and you know that dialogue that we're gonna interact with this and somehow by issuing our own currency is the standard discussion about political power when it comes to cryptocurrencies I'd like to start posit different way of thinking about this which is the state has no power the state is completely useless it's a chocolate teapot right the set of problems that face humanity today are completely out with the scope of the state to address a classic example of

[1:03](https://www.youtube.com/watch?v=6gVri8wVGPc&t=63s) this is polio eradication you know through this very very long slow process we get really close to eradicating polio right yeah another one of the world's great diseases stamped out and then polio catches a new lease of life again because the American security establishment dresses up a bunch of people searching for Osama bin Laden as polio vaccinators and now in large parts of the Muslim world have completely lost faith in the polio eradication process because it's been used as a cover for an intelligence operation and as a result polio is alive again and that's a really small example of a very specific kind of critical incompetence where the battle of nation-states for power results in their inability to effectively solve global issues and once you see this as a pattern that the struggle of the nation-state against other nation-states for power or for security or for gain for the standard of living of its people once you see that that mechanism is fundamentally preventing us being able to solve global issues you begin to frame the problems that we face in a different light right it doesn't really matter whether or not something like Bitcoin is an effective challenge to the power of the state inside of these narrow definitions what matters is whether something like Bitcoin or Ethereum or any one of these four chain currencies whether it has the ability to solve global problems that the state is currently incompetent to solve and once you frame this as being about identification of competence and application of competence to problem solving you begin to understand that there is in fact an enormous Uncharted wasteland of the stuff that the Westphalian nation-state is simply unable to solve because it's the wrong institutional vehicle and once we accept

[2:58](https://www.youtube.com/watch?v=6gVri8wVGPc&t=178s) that there are a whole bunch of critical problems in the world that the state is simply unable to solve because it's the wrong institutional vehicle what you see is that we're in fact not surrounded by encroaching power to are telling us what to do we're surrounded by incompetent powers that are refusing to take effective action right and once it is framed that way the notion that you could be building a political power base that was solving problems the state was unable to solve while at the same time delivering real human benefit to me begins to cook a much more rational way of discussing why is it things like Bitcoin are important fundamentally it's not about competing with the state for the territory to stay already has it's about going to the unsolved problems that's faced humanity and solving them independently of the state because if the state can't get to this stuff and has failed to get to this stuff in the period from say the end of second world war now if they've been ignoring a problem for that long or struggling with it and never actually deliver and I think we can reasonably assert that the state is not going to be able to solve that problem which means that that territory is free for any enterprise that's able to get in there and take it does this kind of make sense as a beginning point for a discussion this is a pretty radical way of looking to these things but let's just kind of play that I wanna see where it goes

[4:23](https://www.youtube.com/watch?v=6gVri8wVGPc&t=263s) so I'm gonna very quickly scoot over um where this whole watch-chain thing comes from in a kind of deep history of technology to get to the interesting stuff at the end which is what happens when we start a finance technology development a different way so I'm just gonna scoop by this Ronald Coase right Nobel Prize 1940 nature of the firm suggests that the purpose of a company is to take the expensive difficult project of making a decision and then spread the benefit of that decision across as many people as possible all of whom are essentially paying a little bit for the decision so you work for IBM IBM has to decide whether they're gonna develop the future in sear in Java they got a whole bunch of smart people sit down and think about that and eventually they pick Java you benefit from that decision because you were basically going to just pick a language out of a ha they had a nun a political team that made the decision for you you therefore take a salary rather than a contracting rate this is kosis fundamental theory the companies exist to make decisions on behalf of their employees and that that service is worth enough that the employee does better that way than if they were an independent contractor it's certainly that the whole truth about why companies exist it's a huge part the reason this is relevant is Koshien constraints typically bound an enterprise things don't get any bigger than costal open to a but B because when you get an enterprise which is too large it begins to make wrong decisions they're generating an insight into what it is they want to do in the future the apply the insight but the organization is so large that the cost of making the decision is now higher than the domain you can apply it to so really big companies try and make smart decisions but actually the decision doesn't apply to one part of the company because the thing is just too strong so the more regular and monoculture a company is like Walmart the easier it is to make these decisions across the whole thing but the more specialized and technological and fast-moving it is the smaller the enterprises tend to be so this kind of makes sense as a model so once you begin to understand the domain of power that accumulates inside of an organization is related to how far its decisions are valid what you begin to understand is that the political power embodied inside of their leadership of an organization is directly backed by its ability to make good decisions this is another way of saying that things get

[6:53](https://www.youtube.com/watch?v=6gVri8wVGPc&t=413s) big because their governance is wise so if you can begin to pull this thread out and say right so what gives a political legitimacy to an enterprise is the wisdom of the decisions that it makes that's a different notion of where the political legitimacy comes from than the idea that you get political legitimacy by running out and getting your hand on that piece of land first and I think you can begin to see that when you begin to reframe the political debate in these kind of terms effective decision-making is the political mandate not possession of wand this thing's grow based on their ability to make effective decisions for everybody that's subscribed to them you begin to get this little smell of like that smells like blockchains that smells like bottom-up organization that smells like something interesting so second

[7:41](https://www.youtube.com/watch?v=6gVri8wVGPc&t=461s) thread on this Y Combinator does everybody know these guys so very successful investment house in the States they give tiny amounts of money to a small enterprises to try and see them they're going to turn into a big thing the stock classic model was three college students over the course of a summer you know three months for three people 50 grand off you go what they've discovered is that they're really bad at picking winners they're one of the best investment houses in the world and 90% of the time the things that they think will succeed is simply fail 10% of the time they make back about 10 times their money which covers costs and roughly one time in a thousand they get some enormous ly spectacular thing like Airbnb so with the best access to data in the world and tons and tons and tons of human hands-on experience they're still in a position of basically having a magic chicken that pecks up proposals and once we understand that even the most skilled humans in the world are unable to assess a new business idea accurately they might be able to pick out a few things which are certainly going to lose but they are definitely not able to pick out which will when you begin to understand that this is essentially a random process right it doesn't have enough information in the proposal or from talking to the founders do you able to tell whether or not the idea will work or not and I think that there's a revolution waiting here which is if we know that the VCS will n of 600 or 800 a thousand are unable to tell the difference between winners and losers it's almost certain that an individual entrepreneur will never be able to tell whether their idea is a good idea or not right and if we accept that an entrepreneur that is certain they are gonna win is batshit insane but an entrepreneur who says I don't know whether this is gonna work or not but it seems worth a shot is rational I think we could see a kind of post optimism entrepreneurialism so entrepreneurs that really understand the statistical it's a failure that really understand how unpredictable success is and have a kind of methodical chopping block approach you give me a bunch of money I'm gonna go out there and fail if by some chance if we vote the wind would fail to hit the ground we will all be rich right and this notion that you could have a different emotional positioning of the entrepreneur that was less about arrogance and an enthusiasm and more about rational estimation of the odds begins to hint at a kind of scientific

[10:11](https://www.youtube.com/watch?v=6gVri8wVGPc&t=611s) rational entrepreneurial activity right quality of decision making is for institutions to draw their authority from and there's this essentially random walk through the success space where the entrepreneurs and the VCS are basically throwing money at a random system with some ability to steer maybe but not much of a qualitative basis quantitative basis rather for knowing for sure and out of this comes this kind of question right what if what we need is to fund an enormous amount of innovation relatively round the blue because nobody's actually smart enough to know what's worth doing and what's not and we all feel the technological change is slowed and is more or less stalled since the 1960s right we are chipping away at technology incredibly slowly because it turns out to be really hard to fund stuff particularly important crazy new stuff and we can't get really big funds moved into things like global warming or finishing the job on polio or nanotech a biotech manager and all this kind of stuff right right in the middle of that mess what we see is this incredibly broken landscape where we've basically forgotten how to spend money to get technological progress and I think that we can solve that with blockchain technology so that's what I'm gonna be

[11:29](https://www.youtube.com/watch?v=6gVri8wVGPc&t=689s) talking about ambitious enough so historical context right I'm just gonna fly through this 1970s we invent the database all businesses of any size wind up with a big database in the middle of the shop the database is an expensive piece of software which manages data that lives on tape it's all about managing data on tape right this is fundamentally what databases were it was a set of software for running trait tape drives unbelievable get the 1990s we did the entire thing again for computer networking we build a whole bunch of Technology around Ethernet cables or token ring or whoever it was and we gradually start to connect all the world's stuff to the rest of the world stuff this is really fairly successful the project goes really really well apart from the fact that we never succeed in getting the databases to talk to each other properly over networks it just never works every five years there's another attempt to standardize all the world's stuff so the databases could talk to each other XML EDI Jason Jack's xmm what do you call a JSON RPC soap you could probably name another couple of these things from over the years they'll break on the same problems the first is that the N the N squared problem every time you want two systems to talk to each other you have to verify manually that the two systems connect properly the more things you have trying to connect to the more other things the more interconnections they have and it grows as the square of the number of systems that want to talk so you just wind up with intractable costs because the larger your collaboration is the more expensive it is to add each new player and this is disastrous the other problem is this philosophical problem right that when you begin to put two things into connection with each other that are backed by database the databases usually have fundamentally different understandings how the world works and when you connect them you end up with a piece of software in the middle which basically translates one set of philosophical understandings to another so is it about the customer or is it about the invoice well the bank wall was think about in invoice terms and they're you know yeah warehouse wall was thinking product terms and the front end walls think of customer terms and when you get to the point of exchanging data the different company's assumptions make it impossible to get across the bridges without additional software and we've been stuck at that for years which is why every time that you try and get to enterprises that are both working for you to talk to each other you wind up

[13:59](https://www.youtube.com/watch?v=6gVri8wVGPc&t=839s) taking the data yourself mashing with a hammer in that handing it to the other guy there's almost no seamless way for me to give an instruction to Amazon to give an instruction to my bank to give an instruction to somebody else you just can't get flow through connectivity across the organizational landscape because we've never figured out how to get past this idea the organizations have a database with a network and the network exists to connect the databases the databases were never designed to be interconnected they don't work at all when you try and do that to them and as a result all of our lives are in these broken up organizational silos with database systems don't really talk to each other and we all got the experience of that anytime we try and do anything complicated with our stuff the same problem exists in government but it's magnified a thousand fold the government doesn't have a single database where it stores everything about you maybe the intelligence databases but certainly not the operational ones so every time you get different parts of the government trying to cooperate to do something everything breaks down because each department has its own silo the silos don't technically connect to each other and as a result the government is basically a balkanized fractured framework in which different databases are failing to interoperate so you can't get a common operational picture of what's happening in your society to make changes it all goes back to the fact that the SQL database was never intended to be an interoperable system and we've never solved the philosophical problems that prevent it from being one there is no fundamental axiomatic schema the old databases share right down on the basis that will allow you to have a philosophical interoperability between them it just doesn't exist as a result everything that runs through big organizations is fractured does this make sense have y'all had this experience right it goes right back to the date based technology so we got absurd the present you get to

[15:54](https://www.youtube.com/watch?v=6gVri8wVGPc&t=954s) the teens you get these blockchains the thing about the blockchains I think is most philosophically important is the ability of the blockchain to force everybody to work in the open we take a whiteboard we take turns writing something on the whiteboard everybody can see we've written if we are having a transaction and we go backwards and forwards a bunch of times and somebody else wants to learn the standard that we're using they can look at the history of prostitutes actions infer what constitutes a valid transaction join the club and once you begin to think of this ability to examine the total transaction histories way of learning how to do a transaction once you look at that as you mess something up and you can then go and look at what happened and everything is there rather than having we lost on a wire because it just went over and our millionth of a second you begin to understand that there's this possibility that you could begin to fix the organization or bureaucracy problems around database interoperability using blockchains to bring everybody onto the same page so if we had 50 Agra organizations that were cooperating and every step in the cooperation was done on a blockchain it becomes very very easy because there is no centralized schema inside us each organization you actually have a database technology that was built from the ground up for interoperability and all of your organizations are sharing that working space together and I think that this could potentially be the end of the silo problem that causes organizational balkanization we could actually wind up with an easy flow of tasks since structures between organizations because we finally have a database technology which is Network native and I'm incredibly excited about this you know it's easy for me to imagine 50 years in the future that when you have extremely large complex collaborations between multi-party entities that it flows easily and it works because we finally got technology that makes it look like we could get over the bureaucratic hump and I don't think it's gonna take 50 years to implement but I think it might be 20 years it might be 10 years might even be 5 years because the technology is coming along really quickly and the societies are desperate for better ways of solving these problems so smart contracting raise your hand if you understand a smart contract yeah kind of Sarah okay so let me give you what a smart contract is in just really really brutally simple

[18:24](https://www.youtube.com/watch?v=6gVri8wVGPc&t=1104s) terms a smart contract is a Perl script that lives inside of a blockchain right it's just a little piece of code that lives inside of a blockchain and it's got access to some amount of value and it assesses a set conditions and if it agrees that those conditions have been met it moves the value somewhere else now I say parallel it it could be written in any language we use a Ethereum uses thing called solidity doesn't matter what you're using right the fundamental useful thing about smart contracts is they are definitionally visible to all parties of the deal so there's no ambiguity about how the contract will operate right it's a chunk of code you look at the chunk to code your text and there are tax agree what the chunk of code will do but it's actually run everybody loads their value into it and even third parties you can look at that and completely understand the behavior of what's happening so you get to these organizational interfaces with silos meat and rather than having my middleware and your middleware guess and what will happen when we send messages back and forth and praying that it outlet works we both agree on the text of the smart contract we agree this one contract we prove the smart contract and the blockchain and the deal is committed at that point the resources are committed the evaluation metrics are completely clear you get this potential for organizations to interoperate because you've these little snippets of code which are sitting in the blockchain and they are essentially a transaction which we have all committed to perform and exactly what happens will do right decided by the code on the day that it happens right the smart contract is not magic it's just a little computer program that has access to some value and an authority to spender but when you start thinking about what happens when you spoot smart contracts into an environment where the inability to cooperate is crippled in every single aspect of our existence you begin to look at that like wow you know I could actually have a smart contract that made it possible for my phone company to actually correctly communicate to my bank right I mean think of the direct debit as an instrument it's absolutely archaic it's terrible you have massive authority to some institution they could make a billing error and just whack you for 1,500 quid because you let your food accidentally turn onto roommate right you know we're giving enormous amongst authority over our bank balances and into our payment instruments and all of that could potentially be fixed with

[20:54](https://www.youtube.com/watch?v=6gVri8wVGPc&t=1254s) smart contracts same thing is even more true when you start thinking about things like mortgages right transferring a piece of property like a house from one place to another could be as simple as a smart contract that accepts when this escrow account has a value of more than three hundred thousand pounds transfer the ownership to this other person all that conveyancing and the a half percent of your house value gets charged you buy a bunch of middleman all of that stuff evaporates you want to rent a car it's a smart contract there's a chunk of code there's a human translation of the code it's all signed off that the human translation of the code is completely valid in a court of law you create some value into that you know there's your insurance it exists and the next thing alternated enforcement of contracts for simple transactions one aspect the other aspect complex collaborations between big organizations because the code which runs the collaboration is not buried inside of the middleware of each organization independently does this kind of make sense right what I'm pointing that is the possibility that blockchains are the organizational government and there's an S sorry to replumb the world into a system that actually works for people and this is all about fixing bugs and 50 year old technology that nobody accepted enterprise data architects ever really directly confront right those guys get paid the big bucks because they really understand a philosophical level why SQL just isn't working this is a little user Tarek if I figured it was the right crowd you are getting the full user Tarek version right so let's get to the

[22:27](https://www.youtube.com/watch?v=6gVri8wVGPc&t=1347s) fun stuff equity crowdfunding does everybody have a pretty clear idea what this looks like right you get a bucket everybody puts in 20 quid everybody gets a tiny share of equity in a company if the company turns out between the next eBay you get 2,000 quid back ah equity crowdfunding nice yeah equity rates a regular crowdfunding you put the money and nothing comes back equity crowdfunding you put the money back you get a tiny little share of the company and you could actually make some real money ah yeah good equity tried from now equity crowdfunding is obviously a good idea right it is very very very hard to find any rational argument about why equity current funding is a bad idea the only objections that you'll typically see are what if the public get calmed right and that coming from governments that actually operate national water ease right pardon what do you what are you talking about you you allow people to sell cigarettes what are you talking about the bubbles will get conned you're mad right so yes there are some quality control problems with equity crowdfunding as a model you need some way of communicating to people the level of risk and or appropriate way you might want to talk about reputation rating systems you know a Moody's or a standard and poor equity crowdfunding might be a good idea there's all kinds of stuff you might want to do but the basic idea is obviously sound you sit there with a credit card you swipe it you own a tiny little share of a company that's manufacturing some weird-looking device that you quit golf club and tens of millions of people like it then you make a money back it's just not done right but right now the regulatory frameworks around equity crowdfunding it and this is I think the key fight for the development of technology for the 21st century if we win equity crowdfunding I think we'd get pretty much a flying car reach and if we lose on equity crowdfunding I think that we are potentially in a long cycle of decline into a kind of newer feudal patent barren landscape Oh bold stuff right so um here's what I think you'd get if you get equity crowdfunding right in all probability if equity crowdfunding becomes a norm and you might go as far as to have companies which must be equity crowd funded so

[24:57](https://www.youtube.com/watch?v=6gVri8wVGPc&t=1497s) that you wind up with a distribution of wealth right from the first step I think that's an interesting prospect if you get a large company that winds up with enormous growth to the point where it's got hundreds of millions of users a greased it's probably got 20 or 50 or 100 thousand donors and the probability that most of the owners will be few who are regularly using this the company's services actually changes the dynamics so if Twitter was owned by a hundred thousand different Twitter users that had bought in early I think you could be fairly sure that you wouldn't have Promoted Tweets you wouldn't have all of this spam that there being a shuttle up you'd have a privacy policy that actually worked if Facebook was majority owned by twenty five thousand early Facebook users who were now worth a hundred two hundred grand worth and they were and they started I think you can be fairly sure that they would be doing a lot less of the kind of intrusive annoying stuff that everybody hates our Facebook so the prospect that you could begin to have the owners of the service and the users of the service be substantially the same people the simplest way of getting to the first rung of that ladder is a enabling equity crowdfunding and I think that it will provide better services for everybody because nothing is worse than having an absentee landlord right nothing ever gets fixed you got a hole in the roof the roof is gonna stay with a hole in it for as long as it bloody well tapes nobody cares and the vast majority of the technical services that we use every day are run by absentee landlords it's not at all surprising that they're actually a big so equity crowdfunding gives us this ability to imagine a user panel of you know twenty five thousand Facebook users that have the ability to appoint a board that will represent the interests of ordinary users like that and I think that we would all be much happier if we lived in a world in which companies were run by people that were picked by the users of the services that they provide rather than by a bunch of people that were there to squeeze the maximum I'm a shareholder value up this seems like a reasonable prospect and I think that this notion that you could decentralize asset ownership particularly of high tech assets that were being developed very very quickly using these kind of models right you go all the way back to the beginning and you think of this kind of venture capital magic chicken right the venture capital randomness suggests that we're not going to lose much economic efficiency by having crowds do

[27:27](https://www.youtube.com/watch?v=6gVri8wVGPc&t=1647s) the work rather the companies if the companies expertise actually turns out to not help very much giving that capital allocation job over to the crowd yes you're getting at fashions and yes you're gonna get stupidity I think you got those things in venture capital now I'm not suggesting that we're going to be shoveling money into a furnace in some completely inefficient way I think we're already shoveling the money into a furnace but we should let more people shovel more money into the furnace as long as everybody understands that these things are fundamentally non-deterministic and that an investor pitch is basically just a very bright brightly printed bingo card now right if you've got blockchains and smart contracts and all the rest of this kind of stuff equity crowdfunding with the ability for people who have bought a share in a company just though on who the directors will be becomes operationally really fairly simple right you could think are really far complicated Ethereum smart contract and you could represent the entire equity comb front end process right the way through to board elections on it I would not want to be the person i thin that contract but i'm confident it could be done now what you get out of that is an ultra low transaction costs platform that allows people to buy shares and companies sell the shares in the companies to other people if they want them and the current owner of the share can vote in a company election to pick the directors that will then run the company on their behalf and that as a single platform system could potentially become the way that we do the vast majority of innovation funding right across the landscape in the same way that Kickstarter is rapidly coming to dominate new product development right go all the way back to grant park host right Mattel Toys exists to manage for capital from previous generations of toy sales and to invest in new toy development but that's only an efficient process if they're able to make decisions that are better than random huh all the evidence is that for high-tech funding stuff like venture capital does the ability for VCS that accurately pick is extremely low at which point the natural size given Authority flows from wise decision making is extremely small in the domain where it's really hard to get going with the decisions right it's not a lot of lots of small entities to just try random stuff and some of them prosper because it works so what I'm suggesting

[29:57](https://www.youtube.com/watch?v=6gVri8wVGPc&t=1797s) is a weight of fundamental economic efficiency given how hard allocating venture capital is is towards tons and tons and tons of small enterprises doing it and the only obstacle to that is transaction costs and regulation so if we could cut the transaction costs using blockchains and we can get somebody to ok the regulation what comes out of that it's a potential that you could begin to massively accelerate global technology development on a largely democratic basis using equity crowdfunding on blockchains and I think this is amazingly exciting like it's quite hard to get me genuinely excited about something that isn't like a water filter or a solar panel right you really you know do Gupta to get up in the morning and forget equity crowdfunding you know this is a real real real slow thing for me but actually getting to the point to thinking like this might actually be a big fix not a little fix not not like a little bit as if you know sugru connecting to a little bits of plastic I think this might be how we read democratize the means of production global scale why don't we enthusiastic about this check on do it from time to time what thoughts so obstacles right um I've

[31:11](https://www.youtube.com/watch?v=6gVri8wVGPc&t=1871s) talked about this already to some degree fundamentally for this model to not just be rampant fleecing of the public we have to accept that most of the investors are just random guessing or a little better right if you actually believe that an investment house has three times the probability of making a correct investment then a grandma from Iowa has then equity crowdfunding a simpler way of causing the public to burn their money for things that will never give them a return right it's extremely important that we've got to put this as a method that is used in situations where it's extremely difficult for anybody to make a good decision because otherwise the lack of access to high-quality information means that there's an information asymmetry and therefore a power gradient between the investors and the equity crowd funders right if the investors just get really much higher returns on investment than the equity crowd funders there to crowd funders are being exploited right but if the return on investment is roughly equivalent for equity crowdfunding for VCS and for that you've got to include all of the unsuccessful VCS all the unsuccessful angel investors and all the unsuccessful friends and family members that put money into you know young cousin chose company right if you could all of those failures I think that what we'll discover is the equity crowdfunding and venture capital have very similar rates of return but it's an incredibly important point that the argument has to be that they are not getting a worse return on investment that you would typically get from anybody else in the field with that said on the other hand given that we're doing with government's to sell lottery tickets the other approach that you could take is you could say that an individual can only equity crowd fund one of their wealth kind of like a US and credit vaster system you could basically say it's their money we don't care what they do with it as long as the bets are small we don't mind hundred dollar limit per crowdfund there could be many many different ways of managing that risk but if we don't find some really coherent way of measuring the effectiveness of equity crowdfunding models versus VC it's hard to make the argument that the equity crowdfunding are not actually being taken and that's a very important thing that we're gonna have to think about philosophical practical and regulatory level there we go right so I'm gonna basically skip this branch and I'm gonna talk a bit more about how we

[33:41](https://www.youtube.com/watch?v=6gVri8wVGPc&t=2021s) fund the future using this model but I'm just gonna fall over the surface of this equity crowdfunding is one of probably 58 different things that could have talked about ours my god blockchains will change everything right you know I mean whoo great okay well you know mix tomorrow your top medical records the data for the active wand registries you know sometime after that I could talk carbon trading you know it's just everywhere you look if there's an SQL database involved on the computer network I guarantee you could apply blockchain to it and something magical water right the publishing industry well you know you could kind of equity crowd from the books and you could wire it all the way through to delivery and then you could have people compete for printing and you know you just you could just hand wave your way through anything that currently runs on SQL databases and computer networks you can you can basically just you could talk about blockchain revolution and it will almost certainly fit right now strap in we're about to get to the fun part right now it's almost impossible to get fundamentally important new technology funded at the level you need to get it funded to make it work did anybody in this room ever actually take a Concorde no right like a couple here that were old enough to do it Concorde was correct me if I'm wrong three and a half hours to Boston right might have been two and a half Yeah right there before your wife literally so we don't have Concord anymore because it was economically inefficient and because we couldn't organize the capital to fund the next generation of Concord or the runways and everything else that they would needed to make that work if we had equity crowdfunding I bet that we would still have Concord right because I think that you could have gone to the global public and said for God's sake it's a rocket plane just give us money and I think we would have done it it's really hard to convince a bunch of bean-counters that it's really important that humanity has a rocket plane right but there's a willful enthusiasm in the love of technology that I think corresponds very closely to what humans actually need to build in order to survive I think we are emotionally programmed to love a particular kind of gadgetry that has fundamental utility right think of the amazing love that small children have for animals pocket knives and fire right oh that's an evolved instinct so I think

[36:11](https://www.youtube.com/watch?v=6gVri8wVGPc&t=2171s) that our over enthusiasm for new technology is actually an evolutionary instinct on the same fundamental level as hunger or sex or the desire not to be wet and cold and I think that we've created a situation where ordinary individuals have no ways of expressing this kind of techno last other than buying things other people have made they can't get heavily involved in the process of changing the world into a place with flying cars and jetpacks because we don't actually provide a social machinery by which an enormous number of people can actively create our future and this is largely bureaucratic regulatory and transaction cost bound the people want flying cars they're willing to pay for them the problem is that flying car dude has to go and find a bunch of investors that are rolling up route in two and a half million quid for the next round and what he really needs is the 85,000 people that think flying cars are cool and a wrong to take 100 quid pun on it to get behind him once you begin to think of all the places where we need really really really bonkers technology built to solve real human but we can't successfully Apple it allocate capital to open up that territory right the problem is that the people that are holding onto large sums of capital are innately conservative what we need is recreational hobby investment in new technology on an enormous Lea wide scale to bust open a whole bunch of these fundamental technological blocks to deliver us this flying car utopia that we all feel entitled to right and you know what I'm gonna say blockchains are the key I can't see any way of doing this that isn't blockchains from one end to the other and indeed Ethereum the platform comes from exactly this kind of wildly exuberant crowdfunding exercise 9,000 people got together and said we are going to give vitalik enough money to implement this amazing vision of his because we believe that he's gonna change the world into a better place and off we go to the races right the pile in behind that vision and because we don't have all the necessary structures in place for this to be formally inaccurate Ori crowdfunding Enterprise we wind up putting the money into a non-profit it becomes seed money that nonprofit uses to hire a bunch of programmers to write a bunch of open source software but if we had equity crowdfunding vehicles available it's clearly used one right

[38:41](https://www.youtube.com/watch?v=6gVri8wVGPc&t=2321s) the Ethereum is absolutely not an equity crowdfunding you get right down to the technical detail of how the deal was done because there's no legal way for us to have done it that way so instead we have this charitable foundation model but the absolutely fundamental situation is we've love to build equity crowdfunding platforms on top of Ethereum and the next thing that comes after Ethereum could be legitimately equity crowdfunding right so I'm already

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Continues in https://guptaoption.com/texts/296-2.md (part 2 of 2).
End of [296] Vinay Gupta - Transparent Society - Crowdfunding on Blockchains / Ethereum, part 1 of 2. Its connections are at the top of this file; the map is https://guptaoption.com/llms.txt.