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Now organisations are following the same model. With DAOs, like bitcoin, there is no central body to close down or tax. These organisations operate on distributed blockchain networks with no company HQ, no formal organisation at the centre, no base in any jurisdiction and no central point of failure.
Their currencies are their own issued tokens; digital, existing outside fiat economies. Their platforms and businesses will be automated by code, often written on an open-source basis.
Governments are trying to impose taxes, censorship and other rules on the likes of Facebook, Twitter, YouTube, Uber and AirBnB. How will they do that to the social network, the video-, ride- or flat-sharing platform is decentralised?
Many of the often highly libertarian developers in the blockchain space have even stated that their intention with DAOs is to replace the state altogether. If they deprive it of essential tax revenue, they’ll go a long way to doing that.
There are many reasons tech stocks have been able to grow at the phenomenal rate they have since the late 1990s.
One has been the incredible product or service they have been able to offer – Google’s search engine, Apple’s phones and computers, Amazon’s shopping and delivery.
Another has been the sheer scalability of digital tech – Google can make a change to its search engine and billions benefit; a brilliant app need only be uploaded once, but it can be downloaded billions of times.
But also, with valuations based as much on users as on profits, tech companies have not been held back by the heavy taxes imposed on the physical economy. Not having to leak capital to the tax man, means they can reinvest in their own companies, develop quicker and better products and then offer them to customers cheaper.
Well, these same three factors all apply to DAOs, only on steroids. DAOs are going to be huge.
Picking out individual opportunities is a lottery. If this were the dotcom boom, we would be in about 1997. We haven’t even had the first proper hype cycle yet. Google and Facebook haven’t even been invented, and Amazon is still only selling books...
Dominic Frisby Money Week
When it comes to taxes, the tech giants – Amazon, Google, Facebook and Apple et al – have for over a decade now made Western governments look like fools.
Heck, even Starbucks has.
Their globalised business models, with IP here, trademarks there, profits somewhere else, have meant that they can pretty much pay as little or as much tax as they see fit, and there is not a lot governments have been able to do about it.
Tax systems, bound by national borders and designed around the physical economy, have been exposed for the antiquated megaliths they are. Local individuals and companies have been burdened with heavy taxes so that governments can subsidize their out-of-control spending. The globalised digital behemoths on the other hand have got away almost scot free.
Well, if you thought governments were unprepared for the disruption brought to their revenue models by the tech giants of the 2000s and 2010s, wait till you see how unprepared they are for “decentralised autonomous organisations”, aka DAOs.
I’ll bet you less than 5% of government ministers even know what a DAO is. Nevertheless, the 2020s will be the decade of the DAO.
When “Satoshi Nakamoto” designed bitcoin, one of his key aims was to create a money system that had no central point of failure. Previous alternative money systems, he argued, such as Digicash and Digigold, had failed because there was a central company, a central office that could be shut down. Once this central point was shut down, the system came tumbling down with it.
So, intrinsic to bitcoin’s design, was that the system functioned on a distributed network – on multiple computers in multiple jurisdictions around the world. You might be able to take out one or more computers or nodes on the network, but you couldn’t take them all down. And it is the combined power of all the machines operating on the network that makes bitcoin so formidable. A government can make bitcoin illegal, but the computer power required to take down the network is so immense that it is almost impossible. This was Nakamoto’s blockchain.
Cont
I completely agree Mr B.
I think the financial war started a long time ago - currency manipulation is always the beginning. I just pray it's kept as a financial war and doesn't spill over into something worse - as it always has done in the past.
Still, if the banks want to keep gold cheap it just means I can build up more of a hoard as funds become available. I expect Russia and China feel the same.
Aoife
I agree with you Mr Bond. - I'm waiting with baited-breath, half expecting a communique to that effect. - The only thing about it is that several banks have already made preparations. - Not that that means anything. - If there are last-minute changes, it really will endorse/expose the corruption that is at the heart of the global-financial system and the power of the few who control it. - Due to social-media/internet, I believe there is a greater awareness now than at any time in history of the game afoot. - Will the powers that be take the risk of exposing themselves to a possible violent backlash?