The basic problem right now is that adding capital dilutes labor, but adding labor doesn't dilute capital. I think this is one of the biggest problems the blockchain can solve by driving down the costs of double entry accounting by at least an order of magnitude.
This is super interesting but I don't quite understand it.. Can you explain how adding capital dilutes labor? Also, how does blockchain make it cheaper to do double entry accounting?
When you bring on new investors, it dilutes the equity of employees. But when you add more employees, it generally doesn't dilute the equity of investors. Rather, pools of equity are created periodically for employees with investor approval, and employees get options from that pool.
With blockchain though you can give equity in realtime, e.g. every 5 minutes that people are working, rather than once per year or whatever. The fact that work and equity distribute can both be monitored very granularly at no extra cost means that labor can (and will) be given equal footing with capital, rather than having hiring and compensation changes approved periodically by investors with little to no input from labor.
Thank you for clarifying. Couldn't a well drafted contract achieve the same ends as blockchain for giving equity in realtime? It seems like that is more an issue with the terms of the current employment contracts and not a technological deficiency
