Much like people invest in crypto to escape the intervention of authorities, many people are turning to crypto to escape major corporations as a way of earning. It may seem hard to believe, but working for large corporations hasn’t always been a thing. For example, the first American corporations were developed in the 1790s. The agreement of this form of working to earn is that you sell your labour to a corporation and they pay you money for your time.
Traditional payments of money are tied into fractional reserve banking, which is the banking system used by almost every country in the world. The Modern Money Mechanics published by the central bank of the United States (The Federal Reserve) explains the logistics of money creation and the debt that it creates in fractional reserve banking.
If the United States government decides it requires money, it contacts the Federal Reserve for an amount. Let’s say, 10 billion. The Federal Reserve agrees and offers to buy them in exchange for 10 billion dollars with of bonds, similar to an IOU. The government then collects its 10 billion dollars, exchanging them for the bonds and deposits Federal Reserve Notes and the amount officially becomes legal tender.
By design, government bonds are instruments of debt. When the Federal Reserve purchases these bonds, with money they are creating money out of thin air, the government is promising to pay the agreed amount back. The money, therefore, is created out of debt. The issue with this is if money is attached to debt, and debt causes inflation, then this affects how much a person receives through this form of payment.
This is only touching the surface of debt tied to traditional money, to learn more, check out this video.
Web 3 – Changing How We Earn
One of the biggest implications of web 3, is that it allows people an alternative to these conventional forms of earning, and takes a step away from fiat money. On the world wide web, it’s no longer just working to earn, now the formula is X to earn, and X can mean; play, learn, create, and so on. And with blockchain technology, you don’t even need to be paid with money, you can be paid with cryptocurrencies.
How is it possible?
This new future of earning is possible because of the networks that form around crypto protocols. They emerged as new ways of coordinating, measuring, and rewarding contributions to complex ecosystems. The transition is already beginning to open new doors for individuals to earn. It’s heading toward a growing shift of value capture from groups to individual participation in crypto networks.
Decentralized autonomous organizations (DAOs) can facilitate this, as they can coordinate outside of corporate systems. The earning opportunities available in DAOs will depend on the different types of contributions DAOs need. Through the internet, we are already experiencing different forms of earning besides work, such as influencers and streamers, but DAOs can add to this growing list.
The Internet of Work
Although these different ways of earning don’t necessarily feel much like “work,” they are still examples of individual participation. Providing value within complex networks and earning income based on their contributions. However, these new opportunities are scarcely found and when they are available, they often under-reward the contributor’s value. That’s because these jobs are often still under corporate control using the web2 paradigm.
Increasingly, traditional corporations have self-employed or contractor participants. As businesses grow, they are no longer able to maintain a mutually beneficial and sustainable relationship with these contractors. An uber driver doesn’t grow in value as the company grows, for example. The relationship between the company and the participants turns zero-sum with the contractor being the one that suffers. To maximize profits, the corporation extracts value from these contractors.
Crypto networks resolve this. By using cryptocurrency instead of fiat money, these contractors can experience the benefits of their payment growing with the company, by the coins or tokens increasing in value.
What are DAOs?
DAOs are decentralised autonomous organisations. Most of the DAOs that exist today run on the second biggest blockchain, the Ethereum network. Consider them like an internet-based company which is collectively owned and member-managed. Any decisions made are governed by member proposals and voting to ensure everyone has an equal voice. Starting a business with other people involves funding and thus requires mutual trust which is hard to do with strangers on the internet. However, with DAOs trust isn’t essential. The only thing required is the DAO’s code, which runs on transparency and open verification by anyone.
Cooper Turley, an investor and builder of several popular DAOs, describes them as ‘internet communities with a shared cap table and bank account.’ According to him, DAOs seek to:
- Provide members with a voice through governance.
- Flatten hierarchy and create fluid workstreams.
- Allocate resources to achieve a core mission.
“Regardless of size, DAOs look to solve core missions – evolving a group chat into a success-driven community.”
To read more about DAOs from Cooper, read this explanation on his webpage.
The Structure of a DAO
To learn more about alternative ways of earning, check out our solutions.