CrowdFunding Philanthropy: Proposing a crowdfunded STEEM endowment
Proposing a crowdfunded STEEM endowment in order to show off the potential of the Steem blockchain.
Note: This is not financial or legal advice. I'm still just speculating about how the technology might be used.
Introduction
A financial endowment is a donation of money or property to a nonprofit organization which uses the resulting investment income for a specific purpose. Usually the endowment is structured so that the principal amount is kept intact, while the investment income is available for use...
Last week, I wrote the article, A hypothetical method for creating Steem endowments that resist embezzlement that speculated on the idea of creating a permanent endowment using STEEM. In this post, I will expand on that speculation and write about a way that it could be used to promote the blockchain. But first let me offer a few paragraphs of "color".
Background
The idea in last week's post is that an endowment can be created by delegating all VESTS from one account to another, and then destroying the keys of the delegating account. This would mean that the recipient of the delegation could use the delegated Steem Power to power their voting and collect author and curation rewards, but no one would never be able to power-down the initial delegation.
I was reminded of this again today, when I read the article Critics Worry American Music College Will Be Shuttered After Proposed Sale. The article discusses the sale of the Westminster Choir College to a multi-faceted interest with a for-profit arm and a non-profit arm. In particular, this sentence caught my attention:
Along with the alumni and donors suit, another was filed by the Princeton Theological Seminary, which is arguing that Rider's plans to sell the school do not comply with the bequest of the donor who gave WCC its Princeton campus in 1932.
Although it's about real estate instead of finance, this is similar to the scenario I had in mind when I wrote the article last week. All these years later, the 1932 donor is still dependent on the legal system to see that their wishes are honored. The benefit (and drawback) to a Steem endowment would be that once the delegating account's keys are destroyed, the endowment is irreversible and unalterable. With that as background, let's move on to the actual proposal.
Proposal
So my three-step proposal is this: First we get some Steem "thought leaders" and technology experts to weigh in on the endowment concept. Are there any technical problems with it that I'm missing? Are there any better ways to accomplish it? (And my big question: how many years/decades/centuries until the donor's key will be crackable, and what happens after that?) What about taxation and other legalities? Once we're confident that we understand the technological and legal aspects of the endowment (in major jurisdictions such as the US and EU), we document the actual step-by-step for anyone to contribute to the endowment, and take it to the Steemizens.
Next, after the technology and legal implications are understood, Steemizens can vote to choose one or more non-profits to receive the endowment, and someone can approach them to ensure that they'll be willing to accept it. Perhaps, the community could also collect estimates (non-binding pledges) of how much people might be willing to donate to the endowment(s). It occurs to me that the Steem Alliance might be a good recipient, but that has the drawback that it would not necessarily bring new people to the blockchain. Also, they may not be organized as a non-profit. At any rate, once we have ascertained a non-profit who is willing to accept the endowment, we move on to the last step.
Finally, the community raises funds and creates the endowment. This could be done in a couple ways, but the point is that anyone who wants to contribute would delegate the funds to an account that's created for the recipient, and then disable their own capability to revoke the delegation. There's some hand-waving here, because there are many details to fill in so that everyone is confident that the delegation is truly irreversible.
Before I close, let me consider some pros and cons of this course of action.
Discussion
The key difference between this proposal and a normal delegation is that a normal delegation can be withdrawn at any time. With an irreversible delegation, the recipient can make longer range plans knowing that the delegation will always be available.
A major reason why steemizens might want to do this as a community is to show off Steem's world-changing potential and attract more users. If we get enough participation, the delegation could be accompanied by a press release and other publicity tactics. It would also offer a practical demonstration of the value of having Steem powered up in the form of Steem Power. And, the recipient would naturally become a marketing ally, because they would most likely want to use the endowment to vote for content that is relevant to their own cause.
If we want to have world-class content on the Steem blockchain, perhaps this could help us get it. In a recent article, @whatsup asked what short word or phrase could be used to promote Steem, and one of my brain-stormed suggestions was incentivized collaboration. Here is an opportunity to show off Steem in action as an incentivized collaboration platform.
The biggest potential problem I see with the approach is the question of how long a key will remain uncrackable in the face of constantly improving hacking technology. Will the endowment really have a permanent lifespan, or do we have to expect it to be hacked in a few decades or centuries? Is there a way to permanently disable an account from revoking a delegation, regardless of whether the key is hacked?
A second problem I see is the question of how to be sure that the delegation really is made irreversible at the time of delegation. In the case I imagined last week, when there are only two agents, by physically co-locating during the delegation and key destruction, it is possible to be reasonably confident that the keys are destroyed, but how do you accomplish this when the funds are raised from among numerous people in diverse locations?
Please add your own thoughts in the comments...
Note: I repeat. This is not financial or legal advice. I'm still just speculating about how the technology might be used.
Thank you for your time and attention.
As a general rule, I up-vote comments that demonstrate "proof of reading".
Steve Palmer is an IT professional with three decades of professional experience in data communications and information systems. He holds a bachelor's degree in mathematics, a master's degree in computer science, and a master's degree in information systems and technology management. He has been awarded 3 US patents.
Steve is also a co-founder of the Steem's Best Classical Music Facebook page, and the @classical-music steemit curation account.
I just saw this and I think it is a good idea!