Better Aligning Value Creation & Value Capture: The Power of Crypto and Community Ownership

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Hatched by Glasp

Sep 03, 2023

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Better Aligning Value Creation & Value Capture: The Power of Crypto and Community Ownership

Introduction

In the age of the internet, traditional business models have been disrupted, especially in the music industry. The shift from charging for content to giving it away for free has led to under-monetization and a discrepancy compared to other industries like video games. However, with the advent of cryptocurrency, musicians and creators now have the opportunity to directly capture the value they create. Additionally, the rise of community ownership and network alignment through crypto networks presents a new way to align capitalism with shared ownership. This article explores how these developments are revolutionizing value creation and value capture.

The Power of Crypto for Value Capture

Crypto networks provide new avenues for creators to capture the value they generate. Previously, platforms like Facebook and Twitter collected valuable user data without any benefit to the users themselves. However, with crypto networks, users can directly own a piece of the value they create and sell it to their audience. By charging fans in a granular way, creators can generate more revenue per fan while financially incentivizing their audience. This creates a win-win situation where both creators and fans benefit financially.

Expanding Value Capture to Other Industries

The potential of crypto networks extends beyond the music industry. Startups that are built, operated, and owned by their users have the opportunity to grow at a faster rate than institutionally owned platforms. This shift towards community ownership aligns with capitalism while providing a more inclusive and equitable model. By allowing all stakeholders to have a financial stake in the platform's success, the ownership economy makes capitalism more appealing to a wider audience.

Zero Knowledge Proofs: Preserving Privacy and Trust

Zero-knowledge proofs (ZKPs) have the potential to revolutionize how we transact online by eliminating the trade-off between convenience and privacy. ZKPs allow individuals to prove knowledge or possession of something without revealing any additional information. This technology addresses the vulnerabilities of the modern, interconnected world, such as identity theft and data breaches. By conducting transactions without sharing sensitive data, ZKPs provide a higher level of trust and certainty.

The Evolution of Zero Knowledge Proofs

ZKPs have been around since the 1980s but only recently gained commercial applications. In the mid-2000s, ZKPs were used to enhance password security. However, vulnerabilities still existed as users had to disclose their passwords to servers. Over the years, protocols were developed to solve this issue, leading to the introduction of Zcash in 2014. Zcash utilized a specific type of zero-knowledge system to create a cryptocurrency with enhanced privacy features. Through continuous innovation, more efficient zero-knowledge proofs have been developed, solving the previous limitations of clunky and expensive systems.

The Potential of ZKPs in Various Fields

The applications of ZKPs are vast and extend beyond cryptocurrency. Projects are already exploring the use of ZKPs for proving credit scores among traders. Additionally, ZKPs can revolutionize blockchain scaling by compressing the entire history of transactions into a single proof. This reduces the burden on blockchains and increases scalability. Furthermore, ZKPs can enhance cloud security by allowing users to leverage cloud computing without exposing sensitive data to service providers.

Taking Advantage of the Hype Cycle

The current hype surrounding ZKPs provides opportunities for experimentation and innovation. This technology is still in its early stages, and there is immense potential for new design spaces and possibilities. For example, ZKPs can enable individuals to remain pseudonymous while proving their skills and qualifications to potential employers. As the technology matures, it will unlock new possibilities that were previously unimaginable.

Actionable Advice:

  • 1. For creators: Embrace crypto networks to directly capture the value you create. Explore granular pricing models and financial incentives to monetize your fanbase effectively.
  • 2. For startups: Consider adopting a community ownership model to accelerate growth and align stakeholders' interests. Leverage crypto networks to raise capital and involve customers as investors.
  • 3. For individuals and businesses: Stay informed about the advancements in zero-knowledge proofs. Understand how this technology can enhance privacy, security, and trust in online transactions. Explore potential applications in your industry.

Conclusion

The convergence of crypto networks and community ownership is reshaping how value is created and captured. Musicians and creators now have the opportunity to benefit directly from their work, while startups can grow at an unprecedented rate by involving users as owners. Simultaneously, zero-knowledge proofs offer a solution to the trade-off between convenience and privacy, revolutionizing online transactions and data security. By embracing these developments and staying informed, individuals and businesses can navigate the evolving landscape and take advantage of the opportunities presented by the ownership economy and the power of ZKPs.

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