The Ethics of Crypto
To anyone that has been paying attention, the potential innovative value of crypto has become obvious. Everything possible in the traditional, highly regulated, and limited world of traditional finance is now possible in the world of decentralized finance. All of the same products are now available to everyone at lower prices and lower latency.
The question we now face is how to identify the moral projects aimed at some form of general “good” from those that constitute profit-making scams that aim at the enrichment of a few at the expense of the many.
The instinct provides the path. Any project, proposal, business plan, or organization whose effect is naturally to enrich the few while leaving the many as “bag holders,” lacks the moral and ethical qualities needed to make it viable in the long run.
But what characteristics define the project that is viable?
Radical Transparency—the project should publish all its moves, so that anyone that commits capital to the enterprise is well-informed to the extent they wish to be.
Distributed Governance—the project should organize itself in a way to ensure that when decisions need to be made, they are both democratic and representative of the needs of the community and not merely large investors.
Aggressive Compliance—any project that seeks to flaunt local regulatory requirements is doomed to a pathetic fate, but the vast majority of real-world compliance requirements are reasonable and tenable. Complying is not only reasonable, it’s affordable and achievable for projects with sufficient creativity.
Distributed Yields—every project that seeks to build any sort of distributed network must simultaneously ensure that the rewards for building such a network are available to the public through reasonable and straightforward investment mechanisms.
There are several critical implications of the above. First of all, most retail “investors” that seek to commit capital and receive yields in exchange are, in fact, conducting a transaction that passes the US’s Howie Test. To wit, even small retail investors that (1) place capital in a (2) common enterprise, in (3) search of profits, (4) through the efforts of some management team, have engaged in a form of securities trade.
That means if you are (1) staking your coins in a (2) node that (3) produces yield as a result of (4) a team of operators, then you pass the Howie Test. Nearly every “pool” or proof-of-stake network in the crypto space is therefore subject to SEC regulation, registration, and compliance.
This is not good.
Silvermint Will Do it Better
Silvermint is a network that will accomplish the broader ethical objectives of cryptocurrency, while avoiding the regulatory nightmare that plagues other proof-of-stake networks.
First of all, every corporation, DAO, foundation or other organization that is a part of Silvermint will participate in “radical transparency.” That means that monthly books will be available to the public, regular audits will be conducted, full disclosures of risk and potential reward will be made, and that at no time will Silvermint hide, elide or evade our public responsibility. You will always know where we stand, where you stand, and where we are going next together.
Silvermint will also focus on constructing a corporate governance structure that permits public distributed decision making in the organizations responsible for managing not just individual validator nodes, but the protocol, the community, and the broader marketing message. We aren’t creating Silvermint to enrich ourselves; we’re creating it to ensure freedom and independence for all our users. And our governance will reflect that.
The Silvermint organizational structure is going to be novel in the crypto space, but its novelty exists to ensure that we are radically compliant with US and international law regarding the sale of tokens, securities and other assets related to the blockchain. We aren’t going to juke the system, we’re going to work within it. The details may seem unusual, but the motivation is evergreen—we want to create a network owned and operated by the world for the benefit of everyone that participates. To do that we need to ensure we’re not breaking any laws. Silvermint has a unique and innovative approach to this that will allow us to move more rapidly than any other Layer 1 project.
Finally, we want to create an environment in which anyone willing to commit their capital for long enough can earn significant, attractive yields. We can’t promise any specific returns in dollar terms, but anyone should be able to put their capital up and earn yields in the form of block rewards. To accomplish this, we will construct organizations that can accept investments and other contracts and produce attractive yields for the retail market.
We’re going to accomplish all of this with a unique and innovative legal approach. We have spent years building a new technology that exceeds the expectations of end users in both performance, throughput, and cost. But we’re also going to innovate on the legal and regulatory side, creating a cluster of organizations, such as DAOs, that will allow us to give the crypto community and the Internet at large exactly what they want from a Layer 1 protocol.
More details will be forthcoming. After all, we’re committed to radical transparency. So tune in and stay tuned for details on how Silvermint is going to revolutionize the crypto space.