Of Co-Operatives and Decentralised Autonomous Corporations in the Blockchain

The cooperative movement began in Europe during the 19th Century. Machinery and mechanisation forced many skilled workers into poverty as capital moved from a wide base to industrialists and business owners.

Groups of tradespeople banded together to work cooperatively and compete with larger businesses. Many of the initial efforts to build cooperative failed but eventually there emerged the Rochdale principles which are now used as the basis for most successful cooperatives.

The Rochdale principles have evolved but have the same general values: -

1. Voluntary and Open Membership
2. Democratic Member Control
3. Member Economic Participation
4. Autonomy and Independence
5. Education, Training and Information
6. Co-operation among Co-operatives
7. Concern for Community

There are many very successful cooperatives which have combined valuations of trillions of US dollars. The most well-known of these operate in the finance or agriculture sectors and include: -

• The National Agricultural Cooperative Federation (NACF) in Korea
• Credit Agricole Group based in France
• Nationwide Mutual Insurance Company in the US
• Rabobank Group in the Netherlands
• The Co-Operative group in the UK
• Zenkyoren in Japan and
• The John Lewis Partnership in the UK

The cooperative model has been successful but it is a small part of the world economy - A world economy that is again seeing a huge shift in wealth to the controlling 1%.

In the future there are predicted to be huge job losses due to automation and use of technology to replace people. This has benefits for business owners and shareholders but little for the majority of people who will see their incomes diminishing and their dependency on handouts growing.

The end result of this is something that needs to be addressed by leaders and politicians but the tendency to just consider the short term issues blinds them to the real problems. Therefore, it is again up to people to band together to provide some protection from global changes. This time, people have the additional tool , Blockchain technology, which facilitates trusted and transparent transactions and governance.

Blockchain technology was conceptualized in 2008 by an anonymous person or group known as Satoshi Nakamoto. It pulls together a set of technologies that facilitate an ever-growing set of ordered blocks which contain information.

This information in stored in such a way that it cannot be altered and as such can be used a distributed ledger of transactions.
By using the blockchain to record transactions, there exists a point of truth which is not under the control of a centralised authority. This allows for the creation of digital assets and ensures transparency of transactions related to these assets.

Some blockchains are also able to hold smart contracts. These smart contacts are effectively code recorded in the blockchain which is executed when a set of conditions is met. Smart contracts can ensure transparency of the logic used in the exchange and movement of digitally created assets.

This functionality is of great use to cooperatives since an asset on a blockchain can act as a transparent membership list, spur economic participation and allow for democratic governance. The lack of a central authority for a blockchain potentially facilitates a co-operative organisation to have a great deal of autonomy and independence. In addition, there will be transparency with respect to any transaction performed on behalf on members.

So what are the new decentralized autonomous corporations that can be built?

Anything that currently relies on a centralized model. Consider large technology companies such as Uber or Youtube.

Uber takes a large cut from the interaction between drivers and riders because it facilitates this interaction - If a decentralised autonomous Uber existed then the interaction would be more efficient with potentially both drivers and riders benefiting.

Youtube relies on a centralized website to allow users to broadcast and earn a % of revenue - Youtube makes huge revenues by linking broadcasters to viewers and adding advertising in the middle. If a decentralised autonomous Youtube existed it could cut out the profits of the website.

In fact, most websites that depend on their user base are much less efficient that their potential DAC competitors. Many of these existing businesses are worth over 100 dollars per user - imagine if the wealth was actually owned by the users instead - Hang on - does that sound a bit like Steemit?

Now we all know that Steemit isn't ideal in terms of its distribution - maybe there is room for improvement. Maybe if these future DACs were to learn from, and be grounded in, the principles of the cooperative movement then we will all benefit from the new technology based services available today.