Steem as a #Business-Platform

The Real Potential Of Steem Power

#Steemfest 2 was an inspirational event. My mind has been racing with possibilities ever since. It's funny that even after 16 months on the platform, I can still be only just realizing some of what is possible. I have been thinking about the possibility of the Steem blockchain running services for the community, real world services that are supported as a public good. There are also loads of ideas for businesses that use Steem or run on the Steem Network.

It was only after speaking with @starkerz that I realized you can do far more than this. If you look at #promo-steem, #steemdev or even #bisteemit, you can see examples of independent groups working on Steem that provide the functions of a department within a company. Only there is no formal legal entity here, the "company" which harbors these departments is the great Decentralized Autonomous Organization (DAO) known as Steem.

How are these departments paid for? In all cases it is voluntary work. People may be working because they enjoy it, and don't see it as work, but still they are being paid. That money comes mostly from the Reward Pool. All Steem and Steem Power holders are funding these projects via the dilution of their stake. Allocation of funds is done by the holders of Steem Power, who vote to support work which contributes value to the network.

#promo-steem is the perfect example here. A team of stakeholders including @stephenkendal and @starkerz set out to increase the marketing of the network. They offered to vote for voluntary work which promotes the Steem network. Voluntary workers set out to market Steem in their home country, according to the guidance of #promo-steem, with loans and merchandise made available by the team.

Complete Businesses Via Steem

We can extend this idea further. #promo-steem et al provide the functions of a department. They provide great benefits to Steem but are not a business unto themselves. If stakeholders are able to pay for the wages of voluntary employees in the Steem Network, why not run a whole business instead of just a department?

According to @siersod, whom I met at SteemFest, the minimum wage in Venezuela is $4 per month. In many countries the median wage is even lower than that. A single whale on Steem at the current price distributes about $450 of rewards per day. All else staying equal, that whale could provide the equivalent of the minimum wage to over 3,300 voluntary employees! And that's without all the normal overheads of formal employment.

3,300 people is a large enterprise. I'm not a whale, but at my size I could provide the equivalent of minimum wage to 600 or more people in continuous employment. A small coffee shop might only have a handful of employees, but businesses that are geographically distributed (think Uber, for example) can make use of a large dispersed workforce.

How would it work in practice?

I think one of the keys to running such a business is to view the Steem network as a stakeholder in the business. Steem payouts are by consensus, just because you are upvoting someone doesn't mean they're getting a payout, it has to be allowed by other voters. A business using Steem this way will need capital beyond just the wages for employees, so they will need direct investments as well as the support of the network. Since in order to run a business this way, you'll need to keep the Steem Network happy, it should provide value to the network. After profit is generated, in much the same way a corporation pays dividends to investors and also does share buybacks, an enterprise on Steem would need to split profits between direct investors and the whole network. One way to do this is to simply buy some Steem and burn it, by reducing the total supply you increase everyone else's proportionate stake just a little. Businesses that provide significant value to the network will provide the incentive to Steem holders to want to support it.

Issues and Concerns

This is truly uncharted territory in the world of commerce, it reminds me of the 17th century, when the Dutch East India company pioneered the concept of a multinational corporation. We don't yet know what the real challenges will be, but I will try to identify some:

1. Almost all employment today is formal, and usually based on a personal relationship between employee and employer. Especially if done on a large scale, we may not know how well informal and distributed profit making businesses will function. Until smart contract technology develops further, there may be significant elements of trust in these businesses, especially when it comes to employees handling money. The details of this will need to be well thought through.
2. Businesses operate with the will of the network. In some cases a single whale could have a grudge against the network, or wish to extort it. Other whales would need to actively defend businesses in the Steem space from extortion, or this kind of commerce comes to a standstill. This is just a microcosm of Steem as a whole, although businesses could be especially vulnerable.
3. Informal employment may avoid issues of state taxes and regulations for now, but it may not work everywhere, and even where it does work, the law can change. Admittedly the state moves much slower than the crypto space.
4. Tracking and rewarding direct investment may be tricky, and introduce legal issues. SMT's may help on the technical side once they're released, but they'd almost certainly be considered securities. If you incorporate as a legal company, you will have 3 sets of stakeholders to contend with: investors in the company, direct Steem supporters and the Steem Network itself.

Please comment other issues that you see with this idea. I'd really like to see it fleshed out more. I also have some ideas for what kinds of business would be suitable in practice.

Credit for this idea goes to @starkerz, I am just trying to develop upon it.

If you like what I do, if you think I am trustworthy and competent, please consider voting for me as witness. You can vote by entering my name 'demotruk' in the 'Vote' textbox on the bottom of the page, and signing with your Active Key or Master Password.