Smart Contracts as an Investment
Whether ERC-20, Cardano, or Steem based, smart contracts have an opportunity to be used to develop asset backed partnerships for the development of partnerships and companies globally that either don’t fit into the standard rules of corporations or don’t want to follow the typical rules.
Smart Tokens are unlike stock in that they don’t “officially” represent anything other than the presently agreed upon trade value. A token grants you, the holder, only the rights outlined in the whitepaper. Used effectively these assets can act very similar to stock, moreover they can represent greater value than stock because of reduced/lack of regulation.
Can an unregulated token be better than stock as an ownership asset?
In order for smart tokens to be a viable ownership asset, there must be two community enforced regulations;
- The governance of the contract must be decentralized (no single party controls a “majority”)
- Each token holder has a vote, or the ability to delegate a proxy to vote on his/her behalf
If the above two rules are followed then, like a corporation, stakeholders and proxies determine the direction of the firm and the value of its assets.
Stupid Easy Money
In an era where literally anyone can write up a whitepaper and generate a Smart Contract or Cryptocoin, there is an enormous flood of what I call “Stupid Easy Money”. In a matter of days, a group of people can develop a website, showcase a “team” (real or imaginary) and raise millions of untraceable dollars.
This “Stupid Easy Money” is a threat to both cryptocurrency and society. With a system that allows people to take millions of dollars and run, the idea that any coin can have a real value is degraded. Because of this diligence in cryptocurrency investment, and a reasonable transparency should be expected for any token or coin one decides to invest in.
The New Crowdfund
Finally, cryptocurrency and Smart Contracts offer an opportunity to crowdfund valuable ventures. As a medium for crowdfunding, the token should represent an asset that can be exchanged for something of value other than influence in the firm. This use for cryptocurrency may be a way to generate a “practical” currency that doesn’t increase in value beyond the real-world value of its backing exchangeable asset.
These are just my opinions of potential uses for Smart Contracts and Cryptocurrencies. Nothing in this Article is investment advice. I am not a financial advisor or investment expert. All investments bear the risk of loss and cryptocurrency is a particularly HIGH RISK investment. Never invest more than you can afford to lose 100% of