How Counterparty Levels the Playing Field


#1

Two of the cornerstones of finance are

  1. Limited Liability Companies
    and
  2. Stock Markets

LLCs ensure that you cannot lose more than you invest. If you buy $100 of stock you cannot lose more than $100. On the contrary, if investors were indeed liable, investing would be too risky for ordinary people. A small investment in a poorly managed company could make you liable for an enormous debt or criminal offences.

Stock markets add tremendous value to investors. Shares you buy today can be sold tomorrow.Shares that are not traded on a market are practically locked for years until - hopefully - dividends pay back your investment.

The advantages of all this is that anyone can invest, and stock markets add value to investors as well. I believe this has been essential to the economic growth of the past two centuries. The downside is that it is a lot more convenient to invest in large companies. They are favored at the expense of small businesses. Getting listed on a stock market is just too expensive for smaller companies, and LLCs require a lot of expensive bureaucracy.

Counterparty is the solution. The good news is that anyone can register an asset at a very low cost and shares can be traded on the DEX or other ways. Being big is no longer an advantage. You can just as easily invest in the local bakery as in McDonalds. Imagine how beneficial this will be to society.

The challenge is how to combine Counterparty with the existing system. The legal challenges are unknown, and they certainly vary from country to country. My advice is to start small. Experiment. Let your Counterparty asset represent a tiny part of your business, like a discount. Let people invest for example by buying discount cards for a future product. The price of the card today can be half the future discount. Keep your word and build yourself an online reputation. Make sure your investors make a profit. This is the key to long-term success.

Gradually people will discover more ways to combine Counterparty with the legal system. Eventually the assets may represent ownership. Maybe this can be achieved through setting up business abroad, maybe the law will evolve favorable domestically, or maybe it is all ready perfectly legal.


#2

I agree with 99% of what you said. Just a couple thoughts.

1.) When referencing use of an asset and using any of the terms “Shares, crowdfunding, investors, pay dividends”, it would be good to advise users that they should always seek legal AND regulatory guidance BEFORE accepting any funds to make sure it is legal in their jurisdiction. Consulting companies like cryptocompliance.io that specialize in cryptocurrency compliance/regulations for small businesses are very helpful to new users.

2.) Setting up a business outside of the US does not give you the ability to transact business with US customers and bypass US laws/regulations. Reguardless of where you setup your business, if you want to do business with US customers, then you need to abide by current US laws and regulations.

Now on to the disclosures :slight_smile:

I am Jeremy Johnson, the owner and operator of CoinDaddy, a US-based crypto 2.0 services company.

I have done business in the past with with cryptocompliance.io

I am not a lawyer, and this does not constitute legal advice.


#3

hmm, you might be right. But the regulatory incumbrance is probably why the cost is high, not the fact that market is centralized. If those regulatory incumbrances don’t go away just because the token is cryptographically secured.


#4

JPJA,

I’m fairly new to all things crypto and very new CP, for some reason your comparison of the DEX to a stock market with low barriers to entry just clicked for me.

I’m starting a company and am just trying to familiarize myself with the crypto currency world, BTC and BTC 2.0 platforms like CP etc…just keep a pulse check on how this disruptive innovation can be utilized for transactions, stores of value, voting mechanisms, crowd funding etc. in my own business.