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Who Has the Right Cryptocurrency Incentives?

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Human civilization is propelled by incentives; and all human ecosystems are driven by incentive structures, which are combinations of interdependent incentives embedded within every human environment. This is true in socioeconomic systems like capitalism and democracy and it’s true for all human governance systems, including the political institutions of governments, profit-driven boardrooms of banks and corporations, cryptocurrency projects, and nonprofit humanitarian organizations. The Gini team has spent years analyzing and developing systems that have rational, equitable and sustainable incentive structures so that the Gini ecosystem is as equitable and sustainable as humanly possible.

Who Has the Right Incentives? The incentives that drive cryptocurrency teams are usually presented as altruistic on the surface, but 10 years after Bitcoin was born, the actual outcomes in the cryptocurrency industry today make it hard to believe the altruistic claims. As we have studied economic history, the dysfunction and broken incentives in many fiat and cryptocurrency systems on Earth today, we asked ourselves, “Who actually has properly aligned incentives to build a cryptocurrency that would protect human rights, provide an equitable and sustainable monetary system, and maximize the broad, wealth-generating potential of real-world commerce?” As we went down the list of candidates, these were our observations:

  • For-Profit Corporations: No large corporation on Earth today really wants to change the unsustainable status quo because the status quo serves the short-term interests of their largest shareholders. Small- and medium-sized corporations are generally too worried about being swallowed by large corporations and do not have sufficient technical skills, available resources, or properly aligned incentives to build an open source, public cryptocurrency, which is necessary to gain the trust and adoption of a global population.
  • Politicians & Governments: No government of a large country wants to change the unsustainable status quo because the politicians that control them benefit from corporate funding, which is directly dependent upon the status quo. Some smaller governments are more interested in cryptocurrencies because they perceive cryptocurrencies as a potential competitive advantage against larger countries. However, their politicians are usually too afraid to do anything that might cause larger governments to lock them out of prestigious global trade conferences and economically significant treaties; so, they’re unlikely to do anything truly disruptive to the status quo.
  • Universities/Colleges: The vast majority of academic institutions on Earth today depend on government funding, which is controlled by short-sighted politicians, who are substantially controlled by short-sighted corporations. So, despite the interesting technological and cultural innovations that often emerge from academic institutions, their financial dependence on politicians and corporations makes it virtually impossible for them to obtain sufficient funding to do anything that would be truly disruptive to the status quo.
  • Existing Cryptocurrency Projects: Regardless of their intentions, the puritanical libertarian philosophy that drives the development of all major cryptocurrency projects today often causes their teams to perceive the inequitable and unsustainable wealth and power concentration in their ecosystems as a feature, not a flaw. The crypto whales that dominate their ecosystems certainly perceive their own concentrated wealth and power as a feature, not a flaw. Additionally, their ecosystems are already deeply bound to unscalable, environmentally and economically inequitable and unsustainable architectures. So, the probability of any meaningful, sustainable disruption coming from existing cryptocurrency projects is virtually zero.
  • Ultra-Wealthy People: The wealth of virtually all ultra-high-net-worth (UHNW) individuals is linked to a large corporation(s). So, no matter how prolific their philanthropy might be in other areas, very few of them would support something that would be disruptive to the source of their wealth. Additionally, they usually have legal obligations to the shareholders of large corporations, which prevents them from acting in ways that could adversely impact the value of their stock. For the tiny number of UHNWs who have more independence from large corporations, we believe some of them will likely support Gini in some way because it's a lot easier to support the Gini Foundation than to re-create everything Gini has already created. (Note: Their support is combined with the support of a growing community of contributors, which ensures that Gini's independence will never be compromised by any UHNWs.)
  • Inter-Governmental Organizations (IGOs): IGOs like the IMF, World Bank, World Trade Organization, and World Economic Forum get nearly all their funding from large governments and corporations. Their lack of financial independence is already well-known to scholars of international relations. So, despite the fact that there are many sympathetic individuals working in these organizations, the probability of them obtaining sufficient funding from their political and corporate patrons to do anything meaningful to disrupt the status quo is virtually zero.
  • Non-Governmental Organizations (NGOs): NGOs are nonprofit organizations that often have a diverse community of stakeholders supporting them, especially if they are a “tier 1 nonprofit,” as defined in Gini’s Community Governance System. Tier 1 NGOs are the only substantial group of organizations in our world today that have enough financial and political independence to confront the unsustainable status quo. However, being an NGO is not enough. The NGO must also have the technical skills, economic knowledge, and real-world experience to build new (not merely clone existing broken systems) secure and scalable blockchain/DAG-based cryptocurrencies with the features that are necessary to convert the vision of a more equitable and sustainable future into real-world systems and processes that produce equitable and sustainable socioeconomic outcomes.

Very Few Entities Have Incentives that are Truly Aligned with the General Public. Based on the observations above, it’s clear that there is a very limited number of entities on Earth today that have incentives that are truly aligned with the best interests of the general public. Virtually all other organizations have incentives that are primarily aligned with the banks, corporations and politicians that directly or indirectly control their financial budgets.

Individuals Have More Freedom to Confront the Status Quo. Despite the lack of political and financial independence at the organizational level, there are many (perhaps most) individuals within many schools, governments, corporations and IGOs that want to fix the problems associated with the status quo. Thus, even though they can’t do anything significant to directly confront the status quo within the context of their organizations, we suspect they will be supportive of the Gini mission in their private lives in as many ways as possible.

The Universe of NGOs are Gini's Natural Allies. There are approximately 10 million NGOs worldwide that have structural incentives that are generally aligned with the best interests of the general public. NGOs also typically have passionate and vocal communities of stakeholders that support their mission, which gives NGOs political and cultural power disproportionate to their relatively modest financial power. Their political and financial independence means they can be strong allies and partners with Gini; and we welcome the opportunity to work with as many of them as possible.

There are Usually Exceptions to Every Rule. We understand there are some truly independent non-NGO organizations that might be good allies and partners with Gini. So, of course we also welcome the opportunity to work with any organization in the other categories above, assuming they're somehow able to escape the clutches of the politicians and corporations that often directly or indirectly control their budgets.

For all the reasons above, the Gini Foundation is structured as a tier 1 NGO to ensure that Gini always has sufficient financial and political independence to avoid being captured by politicians and special interest groups. Additionally, based on the analysis above, it’s difficult to find any other organization like Gini that has properly aligned incentives and the technical skills, knowledge and proven real-world experience to build a privacy-assured cryptocurrency that protects human rights, provides an equitable and sustainable monetary system, and maximizes the broad-based wealth-generating potential of real-world commerce.

See also, Why Trust Gini?

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