Value Mining

1. INTRODUCTION ........................................................................................................................... 4
1.1 GOLDSEEK FOR NERDS ..................................................................................................................... 4
1.2 A BRIEF HISTORY OF THE POST-INDUSTRIAL ECONOMY ................................................................. 5
1.3 BYZANTINE GENERALS PROBLEM ................................................................................................. 11
1.4 REDEFINING INTRINSICVALUE ........................................................................................................ 15

2.0 KNOWLEDGE & CAPITAL ......................................................................................................... 17

2.1 THE NEXT GENERATION KNOWLEDGE CAPITAL MULTIPLIER ....................................................... 17
2.2 THE VALUE COEVAL ....................................................................................................................... 19

3.0 THE BLOCKCHAIN ECONOMY ............................................................................................. 20

3.1 THE EMERGENCE OF THE COOPERATIVE ADVANTAGE .................................................................. 20
3.2 THE BITCOIN BLOCKCHAIN AS A VALUE COEVAL ........................................................................ 21
3.3 THE ETHEREUM BLOCKCHAIN AS A VALUE COEVAL .................................................................... 21

4.0 UTILITY/VALUE .......................................................................................................................... 23

4.1 DEFINING WHAT A CRYPTOCURRENCY IS ...................................................................................... 23
4.2 BLANK SHEET VALUE .................................................................................................................... 23
4.3 UNIQUE CHARACTERISTICS OF CRYPTOCURRENCIES .................................................................... 24

5.0 THE AGE OF FACTORY BANKING .......................................................................................... 24

5.1 THE THREE BIG FINANCIAL REVOLUTIONS .................................................................................... 24
5.2 TOKENISATION OF BLOCKCHAIN MARKET ..................................................................................... 25
5.3 ICOS THE DAO & THE DUTCH AUCTION ..................................................................................... 26
5.4 ICOS MAKE MISLEADING & UNLIKELY STATEMENTS ................................................................... 29
5.5 OBSERVATIONS OF THE TREND ...................................................................................................... 29
5.6 LACK OF AUCTION FUNDING VS. MARKET DEMAND IN ICOS ....................................................... 30
5.7 DEMAND-ACTIVATION DICHOTOMIES ON BLOCKCHAIN NETWORKS ............................................ 32

6.0 THE DECENTRALIZED HEDGE FUND .................................................................................... 34

6.1 PRE-UTILITY VALUE ........................................................................................................................ 34
6.2 THE NEC PROMISSIONEM PROVISION ............................................................................................. 34
6.3 FRACTIONAL UTILITY SYNTHETIC MINING FOR EXPONENT VALUE .............................................. 35

7.0 VALUE MINING ........................................................................................................................... 35

7.1 TYPES OF SYNTHETIC UTILITY ........................................................................................................ 35
7.2 TRIPLE STATE COIN ........................................................................................................................ 36
7.2.1 OVERVIEW OF SYNTHETICS ......................................................................................................... 36
7.2.2. COIN EXCHANGE ......................................................................................................................... 37

CONCLUSION ..................................................................................................................................... 39
Our greatest glory is not in never falling, but in rising every time we fall
Confucius
 DEDICATION

To all those Monkeys who bought

After the gold-seeking chimps fought,
And for the very brave apes who then doubled down again;
Really, who needs a billion-dollar baboon with you guys for friends?
1. Introduction
1.1 Goldseek For Nerds
In January 2009, as the stock markets were in the midst of clawing their way chaotically and
blindly towards an uncertain bottom, while people all over America and Europe were being
tossed out of their offices without a paycheck and forced to abandon their homes after a
single months missed mortgage payment, the instigators of these heinous events were getting
bailed out with money the same individuals losing all they had worked for had paid in taxes
over decades of compliant labor.

The beneficiaries of the government funds included the biggest financial institutions in the
worldthe same ones that had brought about this economic Armageddon in the first place.
Citigroup, Bank of America, Barclays, Lloyds Bank, Royal Bank of Scotland, to name only
the most famous of them, were getting more than a trillion dollars of cash from their
sovereign governments to tide them over the rough patch while their chief executives were in
many cases still getting multi-million dollar salaries, or would be again after a token annual
pay hiatus purely for PR purposes.

What is more, in order to facilitate these grandiose sums, central monetary institutions were
printing money in previously unprecedented quantities, flooding their own economies with
huge potential inflationary pressure.

For the anonymous programmer who had spent two years formulating the conceptual rules of
and writing lines of ground-breaking new code for the worlds first digital currency, the
timing could not have been more opportune to test his product out on the market. Thus, one
cold winter day early that year Satoshi Nakomotoa pseudo name for the anonymous
programmer known affectionately among geeks simply as Satoshiput up the first of
many paginations of open source code for his new currency bitcoin with a simple one-line
observation: Chancellor on brink of second bailout for banks.

Satoshis comment might have been short, and might not have been particularly poetic (Im
better with code than words, he once admitted) but accompanied as it was with a whole
string of code for what looked like the first ever serious attempt to design a unit of financially
usable value outside of the existing mainstream monetary product base, and coming as it did
right in the eye of the most reprehensible lack of action on the part of major governments to
provide for their individual people and small businesses versus their most powerful and
prestigious international institutions, the message rang out louder than if Satoshi had climbed
to the top of Big Ben, Londons centuries-old clock tower, and had locked his arms around
the rope and swung the gong against the bell with the force of his whole body weight.
Indeed, the message that Satoshi was sending that day to the whole market along with his
source code for bitcoins currency was clear as the bright spring morning that lit up Londons
four century old spiral towers as their steeples reflected and then disappeared in the yellow-
white sunlit glare of the River Thames.

That message went something like this: If theres a multi-trillion dollar bailout for the
plutocracy going on right now, then here is a multi-trillion dollar bailout for the people.

Bitcoin was everyones bailout, and it was a multi-purpose bailout, too. It was a financial
bailout, a political bailout, a bailout from the culture of institutionalization in general in
which the vast majority of all generations since the industrial revolution had before now been
compelled to enlist as part of the convention of professional and personal improvement, but
who now found themselves poorer off in return for their participation.

If you thought that it was only the rich who got perks in life, then you were wrong. Bitcoin
was your bailout, was what Satoshi seemed to be saying. You just had to come and get it.
In time, when an increasing number of market participants realized that this was the case,
while others rose up in a call-to-arms to embrace its economic merits, it would collectively be
worth billions of dollars. Bitcoin will in all likelihood probably be worth trillions of dollars
given more time to disseminate throughout the financial system.

But on that day at the beginning of 2009, it was cheaper than a single share of any of the
bankrupt institutions that the governments of superpowers across the west were bailing out. It
was free.

Bitcoin is not free any more, but its still the peoples bailout from the regimen of the
political and economic paradigm of the post-industrial revolution era. It is also a tip of the
cap towards the oncoming force and consequent values of the technological revolution that
shepherds us more emphatically every day into the world we are inevitably headed. Its a
bailout from the economy of the past, and a pass into the economy of the future.

1.2 A Brief History of the Post-Industrial Economy

It is no a coincidence that Bitcoin was born right in the eye of the storm of the subprime
crisis. When economic chaos strikes, its not uncommon for new monetary trends to emerge.
That is, after all, how the gold standard came into being.

During 18731879, hundreds of businesses folded, banks shuttered their doors penniless, and
ten states declared bankruptcy, in a half-decade long period permeated by several violent
economic shocks that was known, until the 1930s, colloquially as the Great Depression.
While the crisis of 18731879 was in a way the first international monetary crisis, it actually
generated a net growth of money supply of 2.6% per year in the United States of somewhere
in region of $40 million annually. How that happened amid such apparent cyclical turbulence
has a lot to do with the economy we now find ourselves becoming a part of.

Before the late 1800s, the monetary conditions of sovereign economies were more or less
unconnected from one another (or even, in many cases, conversely connected, with one
countrys loss being very much the source of anothers windfalls). But with American
industrialization fuelling the growth of Western Europe, market-based economics had begun
to take hold. And so, when on May 8, the Vienna stock exchange collapsed, and was closed
for a 3 day long period, it started in motion a series of panics and busts all over the western
world, ultimately culminating in a lethargic deflation that threatened to stifle growth
altogether.

What happened was that the prices of goods fell even as the money supply grew in value.
Meanwhile, wages rose over 20%, but unemployment rose steadily.
Economic historians are often puzzled by this conflicting set of events. Was it a depression,
given that unemployment was on the rise for over half a decade? If so, then what kind of
recession results in increased wages?

Murray Rothbard, an American libertarian economist, gives the most revealing explanation
for events during the years leading up to the implementation of the gold standard. In his 2002
book A History of Money And Banking In The United States, Rothbard claimed that there
was no economic depression in the 18731879 period, just a realignment of economic forces,
ones that ultimately generated huge productivity in the form of massive infrastructural
growth such as real estate development constructions and the introduction of the railroads.
This infrastructural productivity in turn promoted an increase in both net national output and
net capita output, he explains:

[Economists] have overlooked the fact that in the natural course of events, when government
and banking system do not increase the money supply very rapidly, free-market capitalism
will result in an increase of production and economic growth so great as to swamp the
increase of money supply. Prices will fall, and the consequences will be not depression or
stagnation, but prosperity (since costs are falling, too) economic growth, and the spread of
the increased living standard to all the consumers.

Rothbard hit on a point that beforehand, went largely overlooked: specifically, that
production could be more aggressive in terms of growth than the supply of money. In recent
history, we have tended to think of periods of a lack of liquidity as a bad thing and an
overflow of it as good. But the period of 20082013 showed us a somewhat different version
of events. During this period, for most people it felt as if liquidity had come to a complete
breaking point, and for a short while, that was the case.

But very quickly, from around the mid-point of 2010 onwards, it became clear that major
corporations were sitting on piles of cash. In August 2010, the Federal Reserve reported that
U.S. companies had stored away $1.84 trillion of cash and liquid securities. By March 2013,
nearly a full three years later, they were still hoarding a stunning $1.45 trillion on their
balance sheets. Clearly, there was lots of liquidity in the financial system, but given that these
companies were in a mode of caution, very little of it was being fed back into the system in
the form of employment or investment: in fact, the unemployment rate for graduates was 5%
lower than it had been more than 10 years ago.

Naturally, during this time the activities of technology entrepreneurs were pretty much the
last thing on the minds of government officials, who had a macro-economic meltdown to
focus on correcting. And because the largest companies werent hiring, they didnt get much
of a glimpse into the seismic innovative developments that were happening in peoples
basements around the country, and more widely, the world. But surely enough, even while
economic conditions remained superficially bad, at the same time, an innovative environment
of sorts was bubbling up. Cities not regularly associated with innovative development but
which had been hit hard by the subprime crisis began to shine: in 2012, Chicago tech firms
raised just under half a billion dollars as a new start-up got founded every 24 hours. The
amount raised by those companies doubled to more than $1 billion in 2013.

Many of those companies, such as CoinMap.org and 7Bucktees, were focused on providing
services to bitcoin, which was steadily rising in value. In Seattle, CoinLab, a bitcoin mining
technology, got half a million dollars in venture funding in 2012. Innovative deals were
getting funded; it seemed, just not in the traditional exchanges and markets.

This brings us to a potentially powerful observation when considered in context of

Rothbards statement about productivity growth outmatching the money supply, for it seems
that this is exactly what was going on here during the period of the recent economic recovery.
Only the underlying currency being swamped by productivity wasnt the dollar, but rather it
was bitcoin. This explains why despite a dearth of liquidity in the wider system, and despite
the gruesome employment growth in that period, there was in fact a surge in the value of
bitcoin, which jumped in price more than any other asset in history in a comparable time
period. This poses a serious question about the role of sovereign currencies in terms of
stimulating growth in and recuperating gains derived from innovations associated with
venture currency innovations. In fact, there is reasonable evidence that the dollar has a lesser
impact on value production in venture currencies than does bitcoin.

If you compare the universe of 400 or so currencies to the value of bitcoin on a daily basis,
and then make the same comparisons of these currencies to the dollar, it becomes clear that
the currencies far outperform the dollar in growth terms than they do comparatively in
bitcoin.

While much of this is undoubtedly due to the fact that many of these currencies, by virtue of
their construct, will tend to be classified according to bitcoins headline value and trade in a
way that is somehow pegged to the bitcoin, it is notable that in periods when bitcoin
underperforms the dollar in terms of percentage gains (i.e. it falls in value), competing
venture currencies still outperform the dollar on an increasing basis even if bitcoin has
remained substantially unchanged for long periods preceding the move downwards.
This suggests the dollar is not the benchmark unit against which innovative productivity is
revolving or acting, but rather that some other, more central force of economic gravity is
guiding the pattern of disruption, since the venture currencies are rather referencing the time-
averaged stabilization of the bitcoin price as opposed to the immediate movement of its
headline value.

In a sense then its possible to see that perhaps one of the conditions for innovative
productivitythe type that transforms cultures via an onslaught of radical technologies (such
as railroads and new financial systems, for example)is in fact that it is increasing at a faster
rate than the growth of the monetary economy.

Its possible to see more clearly how the lack of government and big corporation interference
might have provided the ideal harvesting ground for alternative currencies by looking a little
closer at the events in the period that followed the 18731879 economic anomaly.
When the gold standard came into being in 1879, for a decade afterwards, prices continued to
fall and wages soared yet higher, over 23%. But it also had another, more comforting effect
on society: there was an abrupt halt to the tide of unemployment that climbed throughout the
18731879 period. In fact, the labor market began to grow fairly aggressively.
Still, aside from 1873, which was several years before the gold standard was put in place, the
years 1884, 1893 and 1907 all represent years of banking crises and economic panics that
nearly destabilised the system on a number of occasions during those years and in their
immediate aftermaths.

The economist George Selgin has pointed out that these shocks were the direct result of the
massive increase in excess demand for monetary surplus in an environment that was
inadequately tight as a result of banking regulation. In other words, it appears that both the
introduction of the gold standard and as a result a drive towards increased regulation, while
stabilising unemployment and simultaneously maintaining growth in the economy, did as a
result cause periods of intense speculative panic.
When we think of how the price trajectory of bitcoin has fared since its inception in 2009, its
possible to see that in some ways, the more pervasive it becomes, the more it stabilises in
value while at the same time, the more vulnerable it seems to exogenous shocks.

In one respect then it looks very much like bitcoin is acting almost exactly the same way in
terms of being a piece of supporting infrastructure for a whole new branch of venture capital
initiatives today as gold did for the development of railroad and real estate project
developments during the late 1880s. Except theres a key difference: the President of the
historical period, Ulysses S. Grant, was a libertarian thinker. It was second nature to him and
his party to embrace a pegged dollar economy in such a radically evolving time if only to ride
out the pursuant growth period and decisively steer the course of the whole economy
upwards. The same cannot be said for the approach of governments since, however.
During the period of 19331971, the dollar was not a FIAT currency: it was technically
backed by a quantifiable amount of gold. However, the gold standard was abandoned
partially by Franklin D. Roosevelt on June 5, 1933.

By then, the innovation and disruption brought about in the economy via the industrial
revolution had long set in and fizzled out, and Roosevelt wisely feared that the domestic
economys growth prospects of the day might be hampered by such an onerous weight
around the neck of what was something at best hyper fragile. He chose to partly unpeg the
precious metal from the dollar, fixing it at $35 per ounce.

In 1971, on August 5, nearly a century after the strange debacles of the industrial revolution
had caused surging unemployment and rising productivity side-by-side in the days of
President Grant, the task fell to President Richard Nixon to abolish the gold standard
altogether. It was still just thirty-five bucks an ounce.

Immediately afterwards, unemployment rose, to around 8%, but so did inflation, driving
down the value of the dollar and creating hellish social conditions as a result. Meanwhile, the
price of gold, now available to buy in the midst of a fear-stricken market economy,
skyrocketed to $850 per ounce.

This financial deadlock that the U.S. found itself stuck in was in many ways the reverse crisis
of the half-decade of the 1870s: wages kept getting higher and higher, and in turn the money
supply was getting sucked up as prices exploded. Productivity all but fizzled out. You could
forget about innovation altogetherpeople were practically living on the streets.
Fast-forward in time to 1980. Ronald Reagans brand of hard-hitting deregulation took the
wind out of the sails of the gold price, which came back down to earth, while stock markets
surged and wages increased.

Employment sprung up from the midst of the economy like water from a high-pressure tap
thats turned on right to full. From 1982 to 1987, the United States added 18.7 million jobs,
the highest ever in a comparable time period. Unemployment, which fell to just over 5%, was
the lowest it had been in 15 years.

As a result of all this, the stock market during the 1980s tripled in value, after a decade of
barely moving a tick.
The United States is the worlds leading laboratory of economic social experimentation. It
has given rise to two separate scientifically generated economic mega-cycles within a century
and a half: first, the industrial revolution, and more recently, the technological revolution.
Every time it does so, it harnesses power and bleeds a little of it away at the same time as it
experiments with just the perfect policy mix to foster innovation and growth. Because every
worlds economy is in some way powerfully tied to the progress or decline of the United
States, the impacts of its legislative and economic changes are felt in every country around
the world.

Over the years, its fair to say that economic conditions have steadily gotten more stable,
while exogenous shocks created by speculators have become less threatening. You dont feel
it every time a hedge fund collapses, whereas you most certainly would have if one of the
countrys biggest sea merchants were washed ashore with all its homeward-bound loot back
in 1814.

But that has come at a steep cost, one that has in effect been ongoing since the introduction of
the gold standard in 1879. The cost of stability has been increased regulation. That is to say:
more rules. And more supervision to enforce the increased number of rules.
With the gradually rising tide of rule-based economics came a kind of hyper-centralization of
power at the expense of the sort of free market capitalism that once spurred an economy into
an unprecedented state of innovation.

An institutionalization of cultural values set in firmly during the 1950s-1980s, even as the
technological revolution began to sprout up in its midst, calling out for a shift back towards
pre-Roosevelt era economics.

The sweeping progress of regulation and centralized governance was a hard nut to crack once
it was put in place, however. So much so that it ended up cracking all the other nuts once it
got a little fire in its belly.

Thus, instead of passively guiding economic policy in accordance with the principle market
actors, as central bankers were originally supposed to, during the era of President Clinton
administration Federal Reserve Chairman Alan Greenspan effectively began to speculate on
the likely outcomes of various policy implementations that he took in accordance with the
executive office.

Essentially, Greenspan bet big on the direction of market behavior, no differently to the way
a day trader sizes up a series of stock positions. Figuring that low interest rates prolonged
over decades would not lead to irresponsible borrowing but rather, to a sort of self-regulation
that would in turn guide more prosperity and responsible lending, he would tweak U.S.
borrowing rates very slightly depending upon the financial quarter, always trimming them
back when they crept a certain amount higher than their one-year average increase.
Since policymakers had become investment bankers all of a sudden, corporations began to
treat them as such, pitching them lucrative lobbying and special interest contracts like red-hot
IPO deals.

This strange private-public hybrid, all held in place by a series of laws and rules which
permitted huge personal self-enrichment while holding government office at the expense of
objective policymaking, was ultimately sold to the public as the best possible means of
ensuring ongoing economic stability.
Which was a little boring, but most people went along with it. Then, the economy blew up in
2008. People were turfed out of their homes onto the streets by burly private security
contractors, while those who had worked for the past 40 years and diligently plied their
savings into their stock portfolios every month found their retirements in jeopardy, or at the
very least, delayed indefinitely.

Instead of breaking tradition with hyper-centralized policymaking, however, the newly-

elected President Barack Obama did the opposite: he latched onto the side of the broken
banks, automakers, insurers and health care providers. He firmly bolted the fate of himself
and his government to Americas corporations, buying them up and regulating them to the
maximum.

This suited the modern Democrat political agenda, which longed for something of the taste of
the Clinton days again.

Americans got promised change, but in fact they got much more of the same: increased
centralization and the restoration and rebuilding of economic regulatory order. (Like I say,
centralization is a hard nut to crack. Its made of something much more resilient than gold,
thats for sure.)

But the economic crack had created an opening, a chasm in a system wherein there was
something much more powerful building up. The United States was now connected up with
two huge, socialists outposts: China and Russia. Much like North Americans, Chinese and
Russian citizens were weary of the expanding centralized order dominating their daily lives.
They were more interested in making personal connections and impacts upon the world in
which they lived.

Instead of allowing for free-market economics to take its course and to push productivity into
overdrive around the money supply, however, as Ulysses S. Grant had done in 1873, Obama
rigidly held the free-market animal in his grip even as it roared and clapped its jaws around
his hands and wrists in an attempt to break free. Attempts to snoop on Americans every-day
phone calls in the name of security and a zealous desire to prosecute would-be do-gooders
around the world such as Julian Assange and CIA whistleblower Edward Snowden only
fuelled the anger of an increasingly disaffected public which had found fellow sympathizers
all over the world, in communist tyrannies. As with most new alliances, the personal bonds
created between minds strengthened the resolve of those who lay outside mainstream
economic participation.

The fact was, in some ways the White House should have seen this coming, given that the
Democrats put technologys network evolution in play a decade ago. Technology had long
gone from being an obscure science to being something that now embodied an innate and
unique set of creative possibilities and functions, and those effects were widespread and
varied enough to catch on when given the impetus and means to do so.
Thus, in the midst of this last desperate attempt to micro-supervise the populace while macro-
centralizing the financial system, the animus at the center of a new global libertarian order
gnawed hard until it ripped the chain off its neck and ran into the codified underworld to
initiate its own monetary order.
Governments today do not function as slimmed-down policy guidance councils, the way they
did at the turn of the century. Thats why bitcoin sprouted a venture capital movement all on
its own, despite government help, as opposed to with its backing.
The monetary agenda of governments today, big and small, all over the world, is total
control. This micromanagement of the global fiscal and social policy agenda is the single
approach that more than any other, threatens to erode the superior status of the sovereign
superpower more than anything else.

1.3 Byzantine Generals Problem

Given that the Wikileaks was receiving millions of pageviews a day by the end of 2010, and
that Satoshis currency was still worth just 10 cents per bitcoin, one would have assumed that
he would be highly agreeable to seeing the news that Wikileaks was openly accepting
donations in bitcoin after receiving a flood of inquiries to that affect.
But Satoshi Nakomoto, the anonymous programmeror, some now speculated, consortium
of programmers working together under a single assumed identitywas if anything,
disappointed by all the attention. Most of all, Satoshi seems to have feared that the
association of bitcoin with an operation such as that of Wikileaks would jeopardize the future
survival of the currency which was just then beginning to gain something of a cult adoption
online.

It would have been nice to get this attention in any other context (rather than being
associated with WikiLeaks). WikiLeaks has kicked the hornets nest, and the swarm is
headed towards us, fretted Satoshi, as the attention began to reach the outer edges of the
mainstream media sites.

In an uncharacteristically demonstration of something bordering on hysteria, Satoshi even

appealed to the founders of the covert news organization to stop the giving his innovation all
the free advertising: No, dont bring it on. He wrote: The project needs to grow gradually
so the software can be strengthened along the way. I make this appeal to WikiLeaks not to try
to use Bitcoin. Bitcoin is a small beta community in its infancy. You would not stand to get
more than pocket change, and the heat you would bring would likely destroy us at this stage.
Satoshi was learning the first lesson of free-market economics: it doesnt matter whether a
commodity is ready or not for adoption: if its purpose fills a potential role, then more often
than not, it will gravitate to the point of center of the fulfillment of that goal. Immediately.
This is why central banks, regulators and segregated types of market actors have gradually
been introduced to the global financial system over the past century: for the most part
because otherwise, stocks would climb irrationally high (indeed, they already do despite the
involvement of mediating parties), sovereign currencies would zigzag against one another in
value (as do those of venture currencies aside sovereign ones, although not against one
another, as we shall see later) and commercial financing with stable interest rates would be
all but impossible to come by.

Simply put, a market economy is rational only towards the objective of fulfilling its
immediate requirements, not towards attending to its overall, long-term necessities. If people
can realize a 100% return today right away at the potential expense of the company, as
opposed to a 1000% return in five years to the benefit of its employees and customers, they
will much more often pick the first option. Speculation and spending always prefers close-
range action. That, after all, is how the subprime crisis got going.
But donations on a mass-scale to Wikileaks didnt collapse bitcoins functionality or its value
as Satoshi feared, nor did bitcoin get its plug pulled out from the wall by regulators, who
were on the contrary, powerless to stop it and more than a little surprised by its ascending
influence.

Instead, over the following 3 months, bitcoin posted its largest-ever quarterly gain. By the
end of February 2011, one bitcoin had reached price parity with the U.S. dollar. By June the
same year, even after the currency experienced another potentially destabilizing event in the
form of a flash-crash on the (back then, only) public exchange server at Mt. Gox, where it
was bought and sold, bitcoin was going for $17.50.

The massive increase in value despite the technological flaws inherent in the product and its
surrounding architecture served as the first indication that financially, the currency was a
viable long-term harbor and converter of economic value. Simply, its easily-transferable,
low-cost characteristics clearly made it preferable to a sovereign-issued alternative for
payment, at least by a growing niche of adopters for a certain specific sort of payment.
It is hard to overstate the significance of this. That the currency might be appealing from a
purely speculative standpoint is nothing new: after all, there are always gamblers in the
global capital markets willing to take a risk on something untested on the basis that they
might make an outsize return even if the potential downside is that they might also lose the
entirety of their investment.

But the Wikileaks payments, which amounted to several million dollars, showed that a large
number of bitcoins holders were using the currency for payment. The requests to Wikileaks
to accept bitcoin as payment meant that a wide number of people actually chose to hold
bitcoin in a serious quantity before they chose to hold their own sovereign currencies or even
before they chose to hold stock of publicly-traded companies, both of which were far more
reliable an investment and much easier to obtain at the time than was bitcoin. Something was
shifting in the economic geology of the global market place.

The resilience of the currencys price in the aftermath of the Mt. Gox flash crash indicated
that rather than be the cause of over-buying or over-selling, the exchanges servers were
merely experiencing growing pains as a result of the increased volumes that had been
accumulating steadily on both sides of the fence.

This early confidence that bitcoins owners accorded it seems to have attracted another group
of buyers who were interested in using it for the same purposesin other words, for making
fast, easy, cheap payments for goods online.

All the evidence indicates that the gains in the period of December 2010mid-2011 were
very likely then the result of this early adoption of the currency as a payment mechanism,
rather than as a tool of speculative value, which was a later event.

Satoshi should have been popping the champagne cork open. For instead of instantly getting
mauled in a thirst for sudden liquidity the minute it rose substantially in value, new units of
the currency were being steadily generated into the market of owners who were snapping
them up and sending them about the internet. Many stocks cannot experience more than five-
fold gains over a period of one year before collapsing in value. The same is true of numerous
other assets.
Bitcoin had risen nearly 200 times in value, had experienced a temporary blip in accessibility
(in the Mt. Gox flash crash), and still showed signs of accumulating price stability even as it
rose further all within less than 9 months. If you ask a market professional specializing in any
other asset class to give you a comparable example without a price correction following more
or less immediately they would be completely stumped.

Then there was the fact that despite having been embroiled in the Wikileaks scandal, it
nevertheless had regulatory authorities completely so stumped and bewildered what to do or
how to legally blunt its use that instead no one did anything. Rather than become the short-
term arbiters of the currencys fate, as market economics would commonly dictate in such a
cross-section of events, it was instead a phenomenal achievement and a crucial early feather
in the cap for bitcoins chances of long-term survival.

In addition to the fact that it defied what are common economic realities, the growth of
bitcoin in its first years was a sign that the currency was indeed serving a type of purpose that
its sovereign cousin was at the time neglecting or simply unable to. Instead of flooding
towards purchases of HD TVs and iMacs, it seemed to be serving pockets of innovation and
disruption, funding projects and initiatives either directly or indirectly that challenged the
existing status quo of a particular industry convention, especially in the case where providing
solutions to media and political governance practice had for a long time begun to stagnate
(such as in the case of providing the bulk of donations to Wikileaks for its radical
whistleblowing news service, which was simultaneously being given the cold shoulder by
mainstream publications such as The New York Times and The Guardian after having
initially entered into content syndication agreements with both).

Indeedservicing innovation was the centrifugal spark that was lighting the innovative fire
underneath the coals of the currencys rapidly heating up price ascension against the dollar.
For soon, a number of other copycat venture currencies such as Litecoin and Peercoin would
come into being, all containing slight modifications and variations of the original bitcoin
source code that were designed with specific purposes and alternate adopters in mind.
The innovative breakthrough as far as bitcoin as a peer-to-peer currency is concerned is in its
solution to something known as the Byzantine Generals Problem. While Satoshi and other
programmers have gone into great detail about the variations of this problem and its methods
of being solved, suffice it to say that it is a problem, which has to do with the question of how
to prevent counterfeit bitcoin. Counterfeit money is and inevitable and primary problem
associated with establishing a currency, of course, especially with one such as bitcoin, which
has no physical uniqueness to determine visually whether it is real or not.

The solution that Satoshi came up with to the Byzantine Generals Problem was, in a nutshell,
to organize the network so that multiple numbers of minersthose who minted the digital
currency units with computer hardware in order to sell them for profitwould have to
validate every single miners newly-produced unit of currency. What is more, this validation
process was fixed in computer code, so there was no possibility of miners conspiring to
counterfeit units in an under-the-table collective bargaining agreement. Because bitcoin is all
part of one great code, it is impossible for a single bitcoin to be counterfeit and accepted by a
fellow miner, mathematically speaking.

In other words, the computer did the mathematics to create new currency units; while other
miners had to do the processing to make sure that the mathematics was in accordance with
the mathematics they had done themselves when minting the currency.
It was nothing short of genius, and it was for this realization foremost among any other that
bitcoinand its copy-cat venture currency counterpartswere rewarded early on with
having a sustainable and genuine component of value. For if it was harder to counterfeit a
bitcoin than it was to counterfeit a dollar, and if bitcoin was inherently deflationary versus a
dollar market which had just been expanded several-fold as a result of government
intervention in financial markets in recent years, then it stood to bear that one bitcoin was
indeed worth more than one dollar. In fact, it was common sense.

By design, bitcoins environment is the antithesis of the modern monetary system that
governments have painstakingly set out to build over past two decades in the era of highly
identifiable electronic market transactions as an attempt to crack down on money laundering
schemes. And yet at the same time it harnesses the most disruptive aspects of the global
banking system in order to achieve this distinction while embracing a holistic transparency
that is highly appealing. It is this combination that in part made bitcoin so pervasive so fast.
For a start, bitcoin is a peer-to-peer payment mechanism, meaning there is no middleman
involved in broking the transfer between parties, and as such there are no transaction cost
associated with moving it about. That in itself is disruptive to banking.

Then there is the fact that bitcoin itself doesnt really exist at all: the only proof of it being
held in a digital wallet where it resides as property of its owner is when it is moved about. A
long, complex series of numbers, the results of irreversible and unalterable equations
produced at the point when every block of 25 bitcoins is produced, or mined, by powerful
computer hardware, represent the components of these various transactions between peers.
These computer codes together form something called the blockchain, and every bitcoins
unique code must match up to its particular place in the equation there in order to determine
its authenticity. Bitcoin miners, who run the computer hardware to generate new bitcoins for
profit, are responsible for validating every code that is transacted. That of course means that
bitcoin is completely dependent on its miners for the currency to have any peer-to-peer value
at all, since if everyone stopped mining bitcoin tomorrow, no one would be there to validate
the codes when a user sends a payment.

For the moment, the miners are content to mine new bitcoins and perform this service for
free. But mining as an activity gets exponentially harder the more bitcoins are mined, and
there are only ever 21 million of the coins that will be produced, supposedly by around 2040.
What happens when the bitcoins all get mined, then? How will these authenticators get paid
then? Simple: by that time, posited Satoshi, the miners will begin charging transaction fees
for the process of validating peer-to-peer payments. Its a truly free-market system in that
sense, leaving the market itself to regulate its own activities and decide upon the appropriate
price points as it evolves.

Ironically, that was exactly Fed Chairman Alan Greenspans same approach with leaving
interest rates so low throughout the 1990s. He figured that market economies worked in their
own best interests the majority of the time and as such were best left alone. The potential
consequences of this type of free-market self-governance for bitcoin we will look at later in
the book.

For now, imagine the block chain as one giant mathematical equation constantly being solved
by millions of computer hard drives all over the world, which in turn produces more bitcoins,
and think of all the individual peer-to-peer transactions as little chunks of the sum of that
long equation in what appear to be individual SWIFT codes. And that is pretty much what a
bitcoin is: essentially, its a SWIFT code that most previously delivered it into the account
where it resides without being the monetary unit itself.

1.4 Redefining IntrinsicValue

For those who had tired of the order of an establishment that had become morally,
intellectually, politically, and now monetarily, obsolete, the broader socio-economic potential
of bitcoins innovative spring was nothing short of the great leap forward that their ancestors
had once made in the 1800s. Its important to engage the political perspective that combined
to create the reality of this new money in order to grasp the core consequences of its utility.
Despite his reticence about users sending the currency to Wikileaks as a form of donation
towards Assanges rising legal costs spent fighting the U.S. government on appeal of a
classically bogus rape charge, many of the insights and messages that Satoshi shared with
bitcoins community boil to the top with an unmistakable hyper-libertarian, anti-
establishment zealotry. They also display the ideas of someoneof some groupthat was
very aware of the global context of economic development, not just the technical implications
of cryptographic encoding as far as financial systems were concerned.

His observations about the central properties of currency hit a root nerve that few in the
financial world are daring enough to acknowledge: I think the traditional qualifications for
money were written with the assumption that there are so many competing objects in the
world that are scarce, an object with the automatic bootstrap of intrinsic value will surely
win out over those without intrinsic value. But if there were nothing in the world with
intrinsic value that could be used as money, only scarce but no intrinsic value, I think people
would still take up something.

Indeed, people tend to adopt currencies where there is some sort of inherent end-user value
there, depending on the community in which they are serving. This is, after all, why the U.S.
dollar itself is so powerful: almost everyone in the world wants to come to America, given
the opportunity to do so (even though they may not admit it). That fact alone gives the dollar
so much global value.

By coming up with bitcoin, Satoshi was able to recognize two things about the evolving
global marketplace that would inherently give a new unit of easily transferrable currency
value regardless of its ultimate properties just so long as it was mobile and secure.
His first insight was to recognise that everyone in the world wants money for more or less the
same end-purpose today: to pay the rent, to buy a car, to feed their kids, and so forth. Prior to
the opening up of the worlds largest emerging markets, this was not necessarily assumed to
be the case. Many farmers merely wanted a more abundant crop-season: they could not
imagine wanting the sorts of material items such as an iPhone that their grandchildren in
Shanghai today covet.

Secondly, he recognised that while this newly-widened base of middle class consumers
continued to blossom, their means of establishing the sort of wealth that could ultimately
purchase them these sorts of goods were likely to at some level require a form of innovation,
or at least, initiative. And innovation, at its core, is scarce without having any sort of intrinsic
value.

It is often remarked upon how much choice millennial consumers have over ones of previous
generations. Part of the consequence of this increased choice is that the concept of job
stability and a permanent physical community are rapidly disappearing. As a result,
consumers worlds are becoming inherently more self-sufficient, at least on the level that
requires them to make more complex decisions earlier on about their choices. No longer is it
so common for example for a child anywhere in the world to rely on the basis of what ones
parents do to influence seriously their own career decisions. This is only recent: less than
fifty years ago over 75% of middle-class Americans followed in one of their parents
footsteps professionally.

Thus, in a world where increasing numbers of people are interacting with one another
collectively while making ever-more individual choices and decisions for themselves, there is
an enormous variation of decision-making going on in order to achieve what are essentially
the same end-goals.

In such an environment, a currency is merely a means-to-an-end, as opposed to the means

itself. This conceptual recognition of the changing function of monetary service was a crucial
insight of Satoshis that before he came along, went either unnoticed or denied as being
outlandish by mainstream economists.

Its also clear that Satoshi understood a great deal about liquidity constraints and the dangers
they posed on an environment of intense innovation. In one comment he refers to the actions
of the Hunt brothers, two silver traders who got caught out in 1980 when they attempted to
buy so much silver that short-sellers spotted an opportunity to make money when they
realized that the brothers were buying much of the commodity on margin and could not
possibly reduce the extent of their holding fast enough if the price collapsed, given the
exorbitant amount that they held.

Given these sorts of considerations, and the deeply contemptuous suspicions that he held for
government authorities, Satoshi seems to have gone deliberately out of his way to have
designed a currency unit that was at once low-key (he discouraged immediate promotion of
the currency, at least at first), well-secured, and below-the-radar of most peer-to-peer
networks. This was all engineered to comply with an overriding political standpoint, as he
explains in one of his final messages to the public: Yes, (we will not find a solution to
political problems in cryptography), but we can win a major battle in the arms race and gain
a new territory of freedom for several years. Governments are good at cutting off the heads
of a centrally controlled network like Napster, but pure P2P networks like Gnutella and Tor
seem to be holding their own.

All of a sudden, and virtually overnight, swarms of people accustomed to the stangnant 5%
returns of a stock market found themselves rich beyond their wildest dreams, the direct
beneficiaries of Satoshis community bail out thrown to the feeding frenzy of the global
capital markets.

When in the last quarter of 2013 bitcoin went to $1000, reddit, an online forum popular with
bitcoin fans, featured prominently one by a self-acclaimed bitcoin millionaire. with todays
rise in bitcoin Im officially a millionaire, wrote the author, forgetting to punctuate his
sentence in the excitement of the moment.

Im gonna cash out over the next 30 days. Ill keep 50 % in bitcoin gold and silver for long-
term and the remaining 50 % for a house and vanguard. Thank you bitcoin! You changed my
life.
How was this new currency changing so many lives, however? Until now, no one has yet
attempted to answer this question.

2.0 Knowledge & Capital

2.1 The Next Generation Knowledge Capital Multiplier
One of the most satisfying things that I hear said about the Monkey Initial Coin Offering
(ICO) experience is how educational its been to those who have partaken in it. After all,
inasmuch as it is potentially an extremely profitable business opportunity, Blockchain
represents much more than mere windfall profits. Mostly, since it is so new still, its a chance
to learn, first hand and up-close, just how an entire industry evolves. Not just that, but its
also the chance to meaningfully take part in the evolution of that industry at the same time as
you are learning. That Monkey is doing both these things makes me feel its all worth it,
especially on the days when hell and high water are coming close to the shoreline.

If participating in Monkeys wild ICO ride has been educational for those who have come to
it with merely the expectation of flipping a token, imagine what it has been like for the one
who wrote a white paper in June in the hope that someone might take pay a passing interest
in the value configuration models offered within. Hosting Monkey has been a massively
educational experience personally and professionally for me. It has brought me into contact
with a wider range of extremely smart people of all ages, backgrounds and skill-sets than I
have encountered since perhaps the days when I lived in New York City, during my second
Masters degree.

I think it is quite often assumed that because I love knowledge and prioritise it very often
over capital, that I dont have an interest in making money. Of course, this is not the case. I
love making money. I am, after all, an entrepreneur. Thats what is in our DNA the drive to
make a serious, game-changing amount of money. But as someone who loves making money,
and who happens to be pretty skilled at doing it these days, it must be said, I have come over
the years to learn an important truth with respect to the art of creating millions of dollars of
capital wealth. That truth is as follows: while money is always available to be made and is
pretty much the same whenever you make it, the process whereby knowledge is accumulated
and applied has vastly different outcome.

When it comes to engaging knowledge in commercial combat, timing is like else but
dramatic in orientation; youll capture an entire theatre of ADHD teenagers if you get it right,
but only a handful of weary housewives coming home from school car pools if you dont. Of
all the lessons I have learned, this is perhaps the most fundamental one of all. For depending
on the time you acquire and apply practically a given piece of knowledge, the outcome of
your circumstances is likely to vary hugely. If you knew how to develop a website in 1995,
that was a very different story to knowing the same thing in 2005.

Capital accumulation in and of itself however is not time-sensitive, and therefore requires
less importance than society places upon it. Having money in 1999 vs. 2005 merely meant
that you were most likely investing in internet stocks as opposed to west coast housing
projects, both of which would meet dire ends within a couple of years anyway. What I mean
is, there was no socially-significant differential variable in having money in either decade
(nor, indeed, is there in the present one, either) in all cases, having it just means your
chances of making more of it or of losing more of it are increased.
In other words, capital accumulation is a means by which the means is the end in and of
itself. With knowledge, the means becomes the driving force behind propelling real
opportunity into effect. By doing so, you can engineer the most advantageous, and even
unrealistic-sounding outcomes.

Building websites in 1995 made Marc Andreessen, then a scruffy San Francisco 20-
something, the owner of multi-million dollar giant Netscape, which kicked off the dot com
boom (a cultural revolution in and of itself); Jerry Yang, who possessed the same knowledge,
created a sizeable empire in establishing Yahoo! on a near-identical basis; Jeff Bezos and the
guys at Amazon fared pretty well, too.

Fast-forward to 2001, and you will find the game was more competitive already. Googles
co-founders emerged in the aftermath of the dot com crash, and look how much more
knowledge they were required to bring to the table to get a seat at it. Instead of just a website
with some cool-sounding buzzwords representing revenue potential, by then it was necessary
to have something of substantial scientific substance to bring online, in their case a massively
complex and uniquely-tailored search engine algorithm the likes of which it took two
combined PhD theses to develop.

My point is that if you love making a large amount of money, then forget about the capital
you have right now, or need tomorrow to start your next initiative. Thats completely besides
the point. Its a Red Herring. It doesnt matter what you have now, or dont have now. All
that matters is that the timing of the knowledge and by association, the application of the
skill-sets that you possess is being correctly and efficiently applied to a given task. If this is
the case, you will create millions of dollars of wealth out of thin air.

This was the case with Monkey. With an initial investment of $2,000, which purchased me a
headline Platinum Listing status on ICO promotions website CoinSchedule.com, I was able
to utilise a wealth of theory on Blockchain value configurations I had spent weeks months
labouring over in private and a combination of aggressive charm and proactive intelligence to
launch Monkey into the multi-million and soon-to-be, multi-billion empire it has fast
become in what was actually just a couple weeks.

I have never needed to worry about funding the project as frankly, it was completely self-
financing by the second week of operations. By its fourth week up-and-running, the project
was throwing off so much cash that we were able to purchase Monkey.com for a 6-figure
sum and were busy building our own digital asset exchange into the back of it. In this way,
Monkey is testament to how knowledge today of how a Value Coeval works can multiply
your means of making money in a fraction of the time it takes ordinarily or without
possession of such knowledge.

Quite simply, I applied my own theory to a project, and it worked just as expected. If you
want to make money, its worth paying attention to what a Value Coeval is, because its the
kind of time-sensitive knowledge proposition the proposition that has that multiplier effect
built into it. Understanding a Value Coeval is that fundamental a source of Blockchains
capital-essence that it demands comprehension, by entrepreneurs everywhere, at least at the
most fundamental of levels.
Because that is what we who are engaging in Blockchain economics are on a roundabout of
equivalent value configurations, where costs are equivalent, knowledge application is
constant, and returns are exponential. Its what will make Monkey and a number of other
similar companies household names over the next decade. This is nothing less than the era of
coeval value.

2.2 The Value Coeval

The Blockchain maybe the first instance in which cooperation as opposed to competition
is truly engaged as a value configurative process. One of the core tenants of value is that it is
configured according to a competitive paradigm.

This has been the general consensus of the business community since Michael Porter
published Competitive Advantage in 1985, in which he sought to define the core form of
value creation down to its first principles in his modelling of the Value Chain: Competitive
advantage grows fundamentally out of value a firm is able to create for its buyers that
exceeds the firms cost of creating it, Porter wrote.

Fig 1: Michael Porters Value Chain

In 1999, two Norweigan academics, Oeystein Fjellstad and Charles Stabell modelled two
alternate forms of value configuration, with the modelling of a Value Shop and a Value
Network.

In the case of these two paradigms, what was striking though somewhat overlooked at the
time was that the processes of knowledge-sharing and network-overlapping in reality
indicated a less competitive framework for management creation of value.

For example, in the case of a Value Shop, a consulting firm built into the fabric of an
accountancy firm (Arthur Anderson) or a hardware developer (IBM Consulting) was a
natural value-overlap which did not correspond to a traditionally vertically-integrated
management process (since there was no industry vertical being annexed here):
 Fig 2: Stabell & Fjelstads Value Shop

In the case of a Value Network, one or more networks could easily overlap to bring many
more users into contact with one another, as has been the case recently with the evolution of
social networks (where a new network will accept users to log in to their network via a larger
incumbent, such as is the case with Medium, a social blogging network, and its acceptance of
Twitter and/or Facebook sign-ins):

Fig 3: Stabell & Fjelstads Value Network

3.0The Blockchain Economy

3.1 The Emergence of The Cooperative Advantage
The divergence from markets of competitive to markets of cooperative customer acquisition
is undeniable. What has been less clear up until now is how value is created via a legal,
paradigmatic cooperative advantage.
The Blockchain, by integrating all three Value Configurations, may be the first example of a
real revolution in how markets evolve from competitive to cooperative status.

While the Blockchain is clearly a Value Network by design, via utilizing a knowledge-
intensive process (i.e. solving an equation with supercomputers) to create a unit of tradeable
value (a Bitcoin, Ethereum, Ripple etc.), it is similarly a Value Shop and a Value Chain at the
same point in time. We might call this new Value paradigm a Value Coeval, in that it
concurrently and progressively interconnects all three value configurations to produce a
rather unrecognizable form of value.

3.2 The Bitcoin Blockchain As A Value Coeval

Fig 4: Bitcoins Blockchain (Harrison)

Bitcoins Blockchain can be viewed as a closed Value Coeval, in that the process whereby
it creates and delivers value to its end-users is both tight-knit and simplistic from a inbound-
outbound logistical delivery process: a unit of value is created on the network via the correct
calculation of an equation, after which it is delivered to a miner of units. A bitcoin in other
words, can be said to possess a core form of Network Value.

3.3 The Ethereum Blockchain As A Value Coeval

In the case of Ethereum, and by association other token-based units of digital value storage,
the value creation process is more complex. Specifically, the value configurations herein are
expounded, with the network still functioning as the core engineer of value, but with the
chain (inbound/outbound logistics) aspects of the value configuration being distinctly
enhanced to integrate alternate forms of value:

An ERC-20 compliant token is a token that runs off Ethereums network protocol, and which
is modelled on Bitocoins network protocol and run off a separate Blockchain of its own. An
ERC-20 token possesses both Network Value and potential Securitized Value via means of
its employment of smart contracts that allow escrow-style facilities to be optimized and
engaged.

Ethereum was developed as a result of Bitcoins blockchain; ERC-20 tokens (launched as

ICOs) are run off Ethereums network. There are now nearly 800 virtual coins and tokens
available, all tradeable with one another in value chain style dynamics. The evolutionary
trajectory since Michael Porters modelling of the value chain is clear: value has gone from
being supply-chain based, to knowledge and network-based, to what it is evolving into as a

Fig 5: Ethereums Blockchain (Harrison)

result of Blockchain-enabled networks: supply-chain, knowledge-intensive and network-

based simultaneously, or coeval.

Due to the inherent knowledge/network functionality of the Blockchain, this coeval value
appears, rather than being competitively positioned by design, to be one that thrives off
cooperative management process. At the same time, competitive positioning of the
technologys value attributes is alive and kicking, with units of digital value all trading
against one another on multiple exchanges across the world.

In this way, the Blockchain appears be the first example of a cooperative value configuration
working in markets of perfect competition.
4.0 Utility/Value
4.1 Defining What A Cryptocurrency Is
Probably the most overlooked question in the field of digital assets todays is: What is a
token?

First of all, a utility token is distinct from a share, nor is it currency exactly. It is not money.
It is rather a form of assigned value. This form of value when digitally-assigned without
promises is known as a cryptocurrency.

There is a big difference between money and value. It is possible to have negative money and
positive value, as anyone with margin on securities or mortgages on property will be able to
tell you.

The reason someone might hold these two apparently contradictory stances is clear: the
holder believes that the value held will over time appreciate at a significantly accelerated rate
against the negative cash position assumed on the other side of their personal balance sheet.
Historically, this is a smart position to assume. As examples from the stock markets have
shown, over the long term, value trumps money by an outstanding rate of increase.

A cryptocurrency, in its purest form, is not a security either, nor any other form of asset
which has been made readily available to a commercial investing public. It makes no promse,
bears no dividends, and has no intrinsic value property associated with it other than the
utilizable value property of the underlying network.

A cryptocurrency is a blank canvas when it comes to value you can paint on its face
whatever picture you wish. A security, by contrast, has a very fixed definition of value:
specifically, it is a claim on the assets or earnings of an incorporated entity.

A token has no such ability to restrict value, but neither does it contain these restrictions in
terms of value, either.

4.2 Blank Sheet Value

The fact that there is no intrinsic value to a token is among the tokens strongest and weakest
characteristics.

On the one hand, there is no basis for sensible or rational valuation analysis. On the other
hand however, because of the inherently unfixed properties of its unitized value, there is a
whole range of value attributes that can be built into it, and virtually no limit as to the extent
of depth or breadth of value that can be applied, either.

This latter aspect to the token that it is essentially a blank sheet is what has drawn a large
majority of Millennial-generation individuals into the digital asset scene. Simply, for over 20
years, inflation has been growing at a substantially higher rate than has wage growth in most
of the world. At the same time, the number of jobs available to the average skilled worker has
been falling.

Combined with the effect of a much higher rise in education relative to the previous
population-heavy generation, the Baby Boomers; the Millennial generation is one that is
smarter, worse off financially and less in demand corporately than any generation in history.
The effect of this has been that upon leaving University, most people today cannot afford to
rent a condominium without some form of parental financial assistance, let alone purchase
their own, while they remain underpaid relative to their cost of living, or simply unemployed,
for long periods of time.

Naturally, a generation that harbours more intellectual ability and arguably, a much higher
ratio of creative and scientific talent than any that has come before, is not likely to willingly
accept such a status quo before seeking solutions elsewhere. Thus, as increasing numbers of
digital assets followed the launch of Bitcoin in 2011, and digital forms of financing became
more possible via the introduction of crowdfunding, it was predominantly this population that
began to ascribe its own form of innovative, growth-oriented value to concepts that are
entirely foreign to all other generations that precede them.

4.3 Unique Characteristics of Cryptocurrencies

The reason that the concepts of value inherent in the token are foreign to almost everyone
except this core group of underpaid, overeducated talent is because the circumstances in
which this group finds itself are entirely unique. For despite more education, more creative
ability and access to much more efficient and intelligent scientific resources than any other
population in history, most find themselves in financial difficulty and lacking in demand of
commercial opportunity or employment on a regular basis. The token is the populations
response to such circumstances: it is the blank canvas upon which creative, technological and
educated classes whatever their financial or local social status may be drew themselves
towards in finding a new form of value.

Naturally, the token, being the response to this generations social circumstances, is one
which addresses the immediate requirements that such circumstances might entail.
Specifically: It generates significant returns over comparatively very short periods of time via
harnessing the combined properties of all value configurations, and by being essentially a
network device that continues to harness those properties perpetually. This fact enables large
numbers of Millennial participants to join without endangering the chances of others
success. This is unlike a housing or share market which due to the limitation of its rules and
structural constraints, quickly overheats.

Trading operates 24-hours a day, and does not favor one geography or region. While today
this is a relatively obvious concept, it is only so for Millennial generation participants
trading is considered work by most other generations, and as such, not for the evening. This
antiquated definition of work began disappearing as companies stopped providing the same
level of commitment and loyalty to the individuals they employed. Value and functionality
are flexible and easily built into a token, with multiple technological adaptions made
possible. Partly due to this, the token is a unit that can be passed freely over borders in digital
format, an essential characteristic for a generation that is largely interconnected by focus
group, interest and/or physical.

5.0 The Age of Factory Banking

5.1 The Three Big Financial Revolutions
Since 1450, we have experienced 3 economic revolutions: the commercial revolution of
1450-1750, the industrial revolution of 1750-1950, and now, the technological revolution,
which will phase into a biological revolution in about 30 years, briefly, before transitioning
into an intelligence revolution:
 Fig 6: Timeline of science-led global revolutions corresponding and rise of related financial evolutions

For this to happen, processes must be highly connected, they must be automated, secure, and
must be adaptive to extreme velocities. Only the Blockchain configuration has the potential
to manage such a commercial transition simply, any other method of financing growth that
we have tried up until now would crumble in an environment wherein 2 more major
paradigmatically-serious economic revolutions will come about in less than a century from
today.

Each revolution has its own form of banking, characterizing its method of making sweeping
changes. Factory Banking is so labelled because of the unique way in which the value
issuance and cashier technology the Blockchain is also a factory of value.

Before this point, manufacturing has always happened separately to sales and marketing (one
comes before the other). In Factory Banking, the Blockchain makes the process simultaneous
through instant automation at the same time as the mining process is happening, a value
configuration of the Blockchain is ascribing automatic market demand to the resultant
product.

5.2 Tokenisation of Blockchain Market

Since the development and launch of Ethereum and ERC-20 compliant tokens, over $600m
have been raised from Initial Coin Offerings (ICOs). Investors have noticed broad-based
returns of 5-10x capital invested.

However, contrary to contemporary perception among new entrants to the digital asset
market, this trend in successful, widely-crowdfunded ICOs is not confined to Ethereums
network protocol. There were ICOs before Ethereum even existed, that took place on the
Omni protocol, the Counterparty protocol. The NXT asset exchange has been very active; up
until 2014 Peershares also featured successful ICOs (NuShares and B&C exchange).

In fact, when considered in the context of recent history and of the overarching development
timeline of the Blockchain more generally, the events of 2017 really amount to a second
wave of ICO popularity that came to a halt temporarily during an aberration in the digital
currency market from 2014-2016 after Bitcoins market value dropped about % or so.

Up until 2014, NXT was spearheading the ICO market, with hosted issuances totalling more
than $150m worth of tokens on what amounted to around $80m worth of NXT digital
currency. To put things in perspective, this was at a time when Bitcoin was just $500.

As a consequence of these and other factors (such as the natural exponential evolution of
token utility among online users), post-2017 ICO popularity is not necessarily immediately
ascribable to Ethereums protocol novelty, despite the ETH price increases being at least
superficially ascribable to a certain renewed enthusiasm for digital assets.
Rather, I would seek to explain this latest wave of popularity in the token market as a more
fundamental search effort for sustainable platform evolution and best-execution capability of
the underlying technology being engaged in the process of the listing and wider utility and
reliability of the functionality of the token as its own sui-generis asset class.

Despite the strength in the token market, offerings remain thin on management experience,
business strategy and detailed execution timelines. In many cases, big-picture proclamations
(e.g. we want to be the worlds first decentralised bank remains the status quo sales pitch.
Specifically, although smart contracts enable the payment of dividends, this feature is
redundant as it essentially just transplants a pure capital market process on the Blockchain,
leaving a capital asset without any valuation mechanism, which is pointless.)

At the present moment there is an opportunity to offer tokens on the market over the
forthcoming years that are not only benefitted by the rampant growth of the digital asset
market as a whole, but furthermore by the current performance of the assets underlying cash
flow positive supported ICO issuances, despite the sectors failure on the whole.

Before looking at how such a solution might be configured however, lets pause to consider
the principle concerns with the ICO landscape that have been observable in increasing
frequency recently.

5.3 ICOs The Dao & The Dutch Auction

Initial Coin Offerings, or ICOs, are the new fad of the digital asset space. However much
securities regulators might caution the tokens potentially securitised status, if applied
correctly, a clear chasm of difference lies between a security and a token which is traded on
the Blockchain. I have pointed out before now a number of differences with respect to a
security and a token. To recap:

A security represents a fixed form of value only: asset value, income value, or some
sort of derivative thereof whereas a token can represent any sort of value-utility
construct

Whereas a security is a capital markets instrument, its utility being only ever the value
inherent in it, a token may have other forms of utility

The token presents an infinity paradox that a security does not; whereas a security is
value-utility, a token, being in effect utility-value, distinguishes itself apart from a
security by binding the securitised nature of financial product offerings on the
Blockchain in an apparently never-ending circle wherein the final product is neither
value nor utility. Clearly, if a token was a security this paradox would not exist; it
would simply be value-utility

There has been some evidence lately in the form of official legal challenges to the notion that
tokens are securities, both in case studies of publicised legal opinion by law firms
representing ICO participants and also in the form of legal professionals writing on this
subject in the main stream press.

Still, it is clear that the Securities & Exchange Commission is on the hunt for unregistered
issuers of what might be deemed potential securities: Prostar, a celebrity/social media
entertainment token issued by two tech developers in the United States, was voluntarily
folded by the founders after the SEC warned that they may qualify as potential violators of
financial services law. The case of Prostar was surprising for a couple of reasons; first, far
from being an instrument of value-utility, the token in question appeared to have quite strong
utility-oriented characteristics, being as it was a type of celebrity voting device and not in and
of itself having much inherent value inbuilt in the model; second, the entrepreneurs, barely
past adolescence, had only raised $50,000 in their ICO. What stuck about Prostar was
centrally, its employment of a mechanism known as the Decentralised Autonomous
Organisation (DAO).

The employment of DAO structures has been a hot topic for regulatory authorities who
regard them as a potentially criminal violation of securities issuance law. A DAO is
essentially a form of special purpose vehicle (SPV) that is established in a non-legally-
structured format to avoid the process of management having any responsibility associated
with cashflows raised for a specific project.

That is not the same thing as saying that management wants no control over the cashflows
however, and herein is the problem with DAO structures management wants full ownership
rights over cashflows passed through DAO structures, but none of the hassle associated with
the legal responsibility of managing it. Needless to say, this is a highly unsatisfactory
position for both investors and government authorities alike: millions of dollars of peoples
cash sat under the direct control of a few individuals who, if anything goes wrong, simply
wash their hands of the problem and claim that the structure which they are employing is
decentralised, and therefore, no one in particulars responsibility at all.

When considered thus, it is clear by looking at the Prostar case that the SECs attempt was
less concerned about the amount of money raised and more bound up instead with the process
of ensuring some form of precedent was set whereby the founders of a structure employing
DAO-structures took some form of ownership over its set-up. The point was not to go after a
case where big money was at stake, in other words, but something of precisely the opposite:
to create ownership precedent of some form in a case where the money raised was so
inconsiderable that fighting the Commission would seem like nothing other than sheer folly.

DAO structures are most certainly at the heart of legal disputes over the regulated/non-
regulated status of ICOs, at least for now. But it is my contention that this need not be the
case at all, nor that it is in anyway an essential or even beneficial structure for ICOs to adopt.

To be certain, the days of Crypto being an unregulated section of the financial services
landscape will not last forever. Ultimately, there will surely be some form of regulatory
oversight. This is arguably much-needed, for despite the liberties enjoyed by those working
check-and-balance-free, it is those liberties that are giving rise to so much social aggravation
in the industry, whereby one party attempts to ruin anothers reputation based on nothing
more than heresay and subjective opinion, or where a group of traders decide to attack the
product or market of a competitor without exercising restraint over the extent of their actions.
Still, until that day, digital assets remain in legal limbo, somewhere between cash, a security
and an everyday consumer product (the regulation as it will be applied will probably be done
so with these coordinates in mind, once it comes around).

DAO structures are not just an inefficient method of raising capital, they are legally an
unnecessary extra risk. DAO structures require that a certain sum of money is raised for a
project from the general public in the form of cash or cash-like assets such as Bitcoin, and
that as it is raised it is placed in a specific wallet. A management team then administers the
cash raised like any other management team raising capital by issuing equity, except, because
the cash is raised via the DAO structure, none of the rules of accountability apply to such
management executives. Clearly, this is neither a tenable or desirable case.

Since Monkey Capital the precursor to Monkey began its own ICO process in July 2017,
I have assiduously avoided the employment of a DAO structure. In fact, in the original White
Paper, I suggested an alternate structure to the DAO, that being a Value Coeval, so named
after the namesake value configuration of the Blockchain I developed in 2014 as part of an
early study of digital asset valuation. Contrary to the DAO, the Value Coeval was designed
not to bypass securities law, but to legally circumvent it by ascribing responsibility of
ownership of the capital raised to a specific party. Thus, the Value Coeval had a third party
which administered payments and receipts from the project to both management and investor
alike. A Russian copycat fund management set-up later employed this exact model and
successfully managed to find a US legal firm to give them the all-clear on the structures non-
security status. Actually, all I did was to employ a share-denominated Limited Partnership in
place of the projects decentralised structure, and in doing so I had in effect created a
structure more decentralised and legally-viable than any other to date.

Thus, the employment of a potentially illegal form of fiduciary evasion is not prerequisite
when it comes to raising capital for an ICO. However, neither is it necessary to raise capital
in the way in which it is currently done either. Here, I am of course talking about the method
of capital raising known popularly as the Dutch Auction method, where a project is made
open for funding for a specific time period during which investors make contributions in
coins and tokens and receive back (usually via smart contract) some form of alternate
tokenised capital-utility.

Since the very start of my involvement with the ICO process, I have stood firmly in
opposition to the Dutch Auction method of capital raising. That is because it is wholly-
insufficient for project financing. For a start, no sort of valuation is predetermined about the
project in advance when this kind of capital raising method is employed. This fact alone
should be enough to deter even the more risk-prone of investors from contributing to such
schemes, for if the managers of a project dont understand how much their project is worth,
how will they ever know the appropriate amount of capital (or as the case may be, capital-
utility-value) to return the initial contributors participating in the Dutch Auction? They
cannot and thus all projections, plans and warranties made by the management must therefore
be considered to be from the outset either false or negligent claims. Second, the Dutch
Auction is open to considerable risk of theft. Time and again, Dutch Auction capital raises
have shown themselves to involve some sort of successful or partially-successful attempt by
hackers to access a wallet containing large sums of crypto in the form of would-be investor
contributions. Third, Dutch Auction raises are impractical from a capital markets listing
standpoint. Specifically, either the project is listed at cash value following the raise, or any
initial rise in the value of the tokens purchased at the ICO is likely to be followed by sharp
sell-offs. There is no attempt whatsoever by those holding Dutch Auction raises to utilise the
capital for business growth projections; rather, the emphasis seems to be on pilfering the
coffers of the wallet at the ICO by the DAO-enabled unaccountable management team.

If all this begins to sound like pretty hair-raising stuff, that is because it is. Dutch Auction
capital raises are a redundant way to go about value creation. Yet they are central to the
employment of the DAO. This co-dependence of the DAO on the Dutch Auction method of
raising capital (or on similar variants of it as proposed by Vitalik Buterin, which ultimately
amount to the same end result) means that as long as ICOs are pushed in the direction of
decentralised management structures or in the direction of glorified crowdfunding campaigns,
the two are more or less inseparable unless either you register the token for sale as a security
and employ the securities exemption act that Monkey Capital did during its ICO, or you
develop a more sophisticated SPV-enabled centralised actively-managed value proposition to
deliberately circumvent in a legal way the SEC securities regulations.

However, what if Dutch Auctions were not employed in ICOs at all? What if, instead of
raising capital via a crowdfunded pre-project raise, a capital raise was conducted on market.
It is my strong contention that this was the greatest discovery that Monkey made during the
Summer 2017 ICO process, and the one for which throughout the month of August, its
competitors tried their hardest to make it pay most dearly for.

5.4 ICOs Make Misleading & Unlikely Statements

The Blockchain market, encompassing all digital assets, is expected to grow by over 60% per
year over the forthcoming 5 years, to a 2021 estimate of $2.3 billion (MarketsAndMarkets).
Of this growth, a sizeable portion may be attributed to ICOs. Consider that there is around
$110 billion in current market value, and there is approximately a 53x growth multiple on
projected value. This is probably inflate by around 75% or so. However, much of this
inflation maybe up to 90% of it is probably equally a reflection not of market overpricing
but inappropriately-directed market resources. For this reason, the contents of this paper are
extremely important: how they are handled amounts to whether there will be another 2014-
2017-style slump in the Blockchain development market, or whether continuous growth will
be allowed to occur. If things stay as they are now, the former will happen. If we develop
appropriate market-based solutions to the ICO process however, the next five years could see
value increases in underlying Blockchain solutions up to the $10 billion level, which would
justify market prices of tokens today.

During 2017, there has been reported an unusually exponential growth curve in the ICO
market that is most likely false to a large extent. According to data provided by
Smith+Crown, contributions to ICOs rose by almost 200% during the second quarter of 2017,
to just under $120 million. Meanwhile however, the total number of ICO projects funded
dropped by around 25%, to just 17 fully-funded token offerings.

This data is misleading to say the least. A literal reading of the numbers would result in the
conclusion that in Q217 there were 17 projects that received an average funding amount of $7
million each, with the remainder receiving negligible amounts of capital. in the first quarter
of the year the number of ICOs funded was approximately 23, with committed funds totalling
$40 million, giving an average of $1.74 million per funded ICO.

Thus, while the amount of total funding for ICOs rose just 2 times over the next quarter, the
average raise shot up 4 times in size. The problem with this is that as we have observed, the
number of ICOs funded dropped commensurately by a quarter. It is simply illogical to think
that a market would see spikes of such magnitude in funding, both on a total funding and an
average funding basis with a commensurate drop in individual projects funded. Cleah

Smith+Crown suggest the largest projects are receiving the lions share of proceeds, but the
data doesnt suggest this at all. In fact, it shows a more not less distributed average, with
the average rising twice as fast as the total amount raised across fewer ICOs.

5.5 Observations of The Trend

Everex, a microlending platform headed up by Jean-Baptiste Decorzent, was introduced to
the author by a Silicon Valley-based programmer who had personally participated in the ICO
in July 2017 and who had also purchased COEVAL and MNY and wanted to introduce two
of the founders of his favourite ICOs.

It was a genuinely kind gesture, except the value proposition that the introducing party
seemed to present that the two firms could establish an operating synergy together
seemed to be secondary among Decorzents priorities.

It has been and is still an epic time for us. In July 24th at 11am UTC+1, we launched our
main Token Sale campaign and raised over $26.5 million. We also got an investment from an
the Holley Group into Everex for half a million, plus further options to a few millions more
from major banks, wrote Decorzent gushingly in his introductory e-mail.

First, Thank you for your interest, indeed Everex has successfully raised significant amount
of money to move to the next levels, he stated in the e-mail. However, I have always
advocated that Everex needed the right balance of crypto contributors (crowdfund) and equity
investors (smart money). To my humble opinion, business angels and VCs would be a
tremendous advantage/asset for Everex mid and long-terms approach.

There are two things that seem bizarre about the claim of raising in excess of $26.5 million
here. First, the singling out of Holley Groups $500,000 participation presumably means that
this was the largest single contribution, while references to further options to a few millions
more certainly doesnt sound like capital raised, but rather, ongoing discussion as to capital
being raised.

Second, for someone fresh off the back end of raising such a large sum of money,
Decorzents introduction seems unusually solicitous here. This would make sense were the
company to have not got anywhere near $26.5 million at its ICO but nearer the $500,000-
mark; after all, the latter doesnt last long when youre beefing up operations.

Its probably a fair bet that Everexs Asian microlending platform ICO obtained about $1
million or so of real funding, in other words. Considered in the light of the Q117 average of
$1.7 million per ICO (and this is likely inflated somewhat too), this $26.5 million makes
much more sense than it does among the Q217 $7 million average bracket.

The point is not to single out Everex as the guilty party here, but rather to charge the market
as a whole of being guilty of fabricating the same fiction with respect to their raise amounts.
The answer as to why firms may choose to take this course of what amounts essentially to
lying to the market is simple (and even defensible given that they have investors already
committed): the tokens are likely to fare much better in on-exchange trading post-ICO if the
perception of the public is that the raise was a high one.

Further compounding the potentially higher-than-likely Everex numbers, consider Digital

Developers Fund (DDF), in which Monkey sunk 1000 Ethereum and to which the author
personally contributed a further 250 or so Ethereum on July 24, around the same date. This
ICO ultimately announced a closing raise of just 6000 Ethereum, what was at the time around
$1.2 million in USD terms. Even this number is almost certainly overinflated by around 25%
or so (that money simply being allocated to insiders on the ICO).

5.6 Lack of Auction Funding vs. Market Demand In ICOs

The suggestion of larger-than-$2 million capital raise events at ICO stage seems to be more
fiction than fact, and certainly, the elusive $100 million ICO doesnt exist at all. Logically,
this makes sense: companies raising capital according to very precise discounted valuation
criteria on the public equity market with equally good performance prospects cannot raise a
fraction of this sum of money very often; it is highly unlikely that ICO candidates can
therefore do so in such a high quantity.

I strongly believe the Securities & Exchange Commission (SEC) has not become involved in
regulating or interfering with ICOs simply because of the fact that they are aware of how
little money is actually being raised by the supposed 8-figure or 9-figure ICO candidates.

With so little of the public wallet purchasing such issuances, they dont present any real
regulatory risk its that simple. The only time we have seen the SEC take an active anti-
ICO stance seems to have been not because of any specific sum raised the ICO in question,
Prostars, raised only $50,000 but rather because the Commission sought to target the
method of capital raising known as the Decentralised Autonomous Organisation (DAO)
which we discussed in the previous Paper.

If the DAO is clearly in the sightlines of the regulatory bodies, and there isnt really much
money to be had raising cash via Dutch Auction most of the time anyway, why hold an ICO?
The answer is simple: because the tokens themselves when traded on any number of Crypto
exchanges ended up garnering real value, which can be sold by founders for Bitcoin or
Ethereum and then the proceeds used in a completely legitimate fashion to fund personal
lifestyle and/or private businesses as the seller of the tokens sees fit.

That is the real objective of most in-the-know ICO participants not to raise huge sums of
cash materially from investors, but rather, to get to market as fast as possible.

Hence, as a result, commensurately with the increased raise amounts you have seen the time
period in which the ICO is open fall dramatically to in some cases, just a period of minutes.
This is yet another mathematical improbability: the chances that the time a fund raising event
is open would negatively correlate with its total raise amount is close to zero.

ICOs are still in abundant supply in fact, so much so that at the time of writing,
TokenMarket had listed a total of 48 ICOs scheduled so far for the forthcoming financial
quarter (Q417). In this sense, clearly the news of mega-ICO events has had an effect on the
ambitions of would-be entrepreneurs who wish to raise capital via a Blockchain-enabled
solution.

The issue, as we have discussed in the course of this paper, is that such ICOs are either
destined to fall far short of their founders anticipated hopes or they will only succeed at
generating the founders any real investible return once they are brought to market.

In the case of COEVAL, and subsequently MNY, Monkey Capital front-ran this process at
first almost by accident, and then subsequently in the case of the latter as a deliberate
response to the market conditions of the former by selling the tokens over Waves
Decentralised Exchange (DEX) at lower-than-average (per ICO) market value.

The effect was to create an enormous rise in the value of COE, and, before market
manipulators sought to destroy the value of both, at first in MNY, too.

The knock-on effect of this effect was to create a surge in trading volumes, whereby at the
end of July COE and MNY combined represented in excess of 85% of all Waves DEX $2
million + average daily trading volumes even as the prices of both were in decline as a result
of the market manipulation forced on them by those wishing to undermine the market-based
ICO process.

Why would someone deliberately attempt to destroy an ICO which had created in excess of
15,000% of value for initial purchasers? Simple: if everyone was to go about doing the same
thing, market expectations would not be on the part of the founders for multi-million dollars
sums but rather, on the part of the investors for multi-thousand percentage point returns. This
represents a highly undesirable position from the perspective of the venture capital firms that
are playing the ICO game off against an unknowing market alongside a few insider
whale investors.

The reason that the Monkey Capital (non)-ICO event generated such enormous controversy
for a non-event wherein the majority of people made far more money than the ones who lost
saw dissipate afterwards as a result of the market manipulation was simply that it undermined
the entire market-based model on which all the large Dutch Auction-DAO model ICOs are
effectively premised.

The point here is not undermine the Dutch Auction / DAO-based ICO approach. I have
already succeeded in doing that earlier. The point is to make it clear that when it comes to
raising capital on the Blockchain, because of the inherent design of the technologys protocol,
market-based capital raises are the only way in which decentralized structures work
efficiently in any way whatsoever.

5.7 Demand-Activation Dichotomies on Blockchain Networks

As I pointed out earlier, Factory Banking tends not to be a good source of generating
cashflow if you approach it from the old-fashioned perspective of ploughing money into
advertisements and hoping for the best. This is because the supply-demand function is
fundamentally different on a Blockchain. That there are so few who know this today or
worse still, believe it to be true in the first place is testament to how easy it is for companies
to get away with lying to their ICO constributors about how little money they are really
raising via the crowd. For the fact it, Blockchains whole modus operandus revolves around
the principle of altering the supply-demand equation so that it is not a question of supply
quantity meeting demand uptake, but rather, of how demand is engaged in order to maximise
supply take-up.

In other words, supply-demand equations look more like demand-supply equations, where
demand is already present by virtue of a user engaging with the network to begin with. In
such a scenario, the key consideration is not where or how to locate the demand for a product
or service, but rather, of how to enable its latent commercial properties.

To be sure, this aspect of the Blockchain holds tremendous appeal to many would-be
business owners. The problem is that the erstwhile entrepreneur equally misunderstands the
practical application of it. Think back to near the very start of this paper, wherein we
discussed the early Bitcoin adoption. In that scenario, Bitcoins own creator was unable to
stem the tide of users who were sending Bitcoin to Wikileaks in order to quickly (and
perhaps anonymously) support the sites mission to expose Big Government misconduct.
This is a classic case of demand-orientation being more powerful as a result of the
technological capability of the network than supply capability. Usually, its the other way
round: in supply chains, if the seller doesnt want to deliver you a product, you simply cannot
source it.
In Blockchain economies, that is not the case: in the event that there is no supply available
over-the-counter or on exchange for a particular digital currency, a user can simply plug in a
mining rig, mine the coin, and use it right away (at least for now that is the case with most
mineable Crypto). This demand-orientation has become so pronounced it has led to the
deployment of smart contracts all over the world on the Ethereum network, in what is nothing
short of an attempt to synthetically recreate the manufacturing process of digital coin mining
in a fraction of the time.

Because of the novel proposition that via the utility of manufacturing a unit of value alone,
someone can immediately potentially generate substantial financial value, the process has led
to an influx of improperly considered, ultimately useless, low-quality Utility/Value
propositions where the community employing the offered service is more or less unengaged
in the act of work they are meant to be performing with respect to their value production
goals. In turn, very little value is actually created and thus genuine utility soon falls into
decline.

A good recent example of a redundant utility proposition on the Blockchain is social

blogging network SteemIt, which encourages users to post short articles that are topical on
Blockchain in return for a fee. Equally, those same users are pay to be able to upvote or
downvote articles they do or do not like, and they are rewarded by the crowd if their
articles achieve a certain number of upvotes. Partly due to the lacking liquidity on the
SteemIt network (there are not that many high quality writers who enjoy being tied to such
amateur-centric writer platforms) but mainly because the users are posting for the most part,
useless headline content or content that resembles spam or at the best, deep conspiracy, the
platform is, after hitting an initial novelty bump, now falling into deep decline.

SteemIt will eventually die out, and so will many other similar low-quality Blockchain
networks, where making money, rather than performing the underlying service proposed as
part of the Utility/Value proposition, is the driving motivation for action.

Given most peoples central requirement seems to be that they generate additional cashflow
then, but that they dont want to do much for it, it is useful to step back here and ask
ourselves: is there a way in which we can create a type of synthetic utility? If there is, then
there would be far less need for redundant Utility/Value proposals where the utility
concerned adds nothing but extra utility without the production of value attached to it.

When we consider the essence of how a digital currency is brought into being, via core
mining activity, and view a smart contract as a synthetic mining application as opposed to as
means of sending, retrieving and storing data, we discover that Factory Banking in truest
sense that is, the mass-production of financial value for the sake of being its own
Utility/Value proposition is not just possible, but in desperate need of being refined before
excess utility for the sake of justifying what little value it creates (and which is more often a
type of negative value contribution of some sort) begin to weights down the growth of the
Blockchain overall.

This is where Monkey comes in as a decentralised hedge fund, for the latter is in essence,
nothing more and nothing less than an arbiter of Utility/Value positions where value is
maximised and utility in minimised to their fullest extents imaginable.
6.0 The Decentralized Hedge Fund
6.1 Pre-utility value
The concept of a premine, wherein a Blockchain creator gifts himself with a disproportionate
number of coins via a specific programming fix prior to engaging in digital mining of any
kind, is a controversial one in Blockchain circles. This is a peculiarity to Blockchain, and
reveals the networks fundamentally utility-oriented community emphasis. Almost
everywhere else in life, the gifting oneself of early-stage non-cash incentives is viewed in a
favorable way, since it encourages the innovator to see through the hardest times of the
project that lie ahead. The conventional view is that while utility is necessary to determine
real value, no one really wants to do it unless there is any value in it. This is not the case in
Blockchain, where one is expected to contribute some meaningful element of utility first, and
in turn, try and recreate a mirror of value of some kind within the process of engaging in the
activity concerned.

A lot of this has to do with the fundamentally essential contribution the majority of users
must be making on the platform to ensure its longevity; because the core exponent which
gives the network such inherent value has to do with the increased activity taking place on
the network, if a user jumps on and does nothing, then quite simply, the Blockchain has little-
to-no relevant application in everyday life at all, and hence, ceases to be a potential source of
value production.

6.2 The Nec Promissionem Provision

Aside from having to propagate some sort of utility-effect in order to stay relevant, it is worth
mentioning here a frequently-forgotten Blockchain characteristic; other than the security of
its core underlying technology, it makes no promises and offers no obligations of any kind.
As such, the Blockchain world is entirely unsecuritized. Therefore, offering dividends, profit-
share-enhanced buybacks or any sort of promissory obligation violates the fundamental
proposition of the technology itsel. Simply, but discarding with utility altogether as a
dividend offer or a profit share agreement of any kind necessitates - one creates what is in
effect a net positive value and net negative utility effect.

For securities, net negative utility to the holder is the desired outcome. This is because the
utility is overcompensated in the form of labor-driven commerce. A security can be
understood to be represented as:

Value*Offset Utility

wherein offset simply means someone is getting paid less than a pure market rate would
ascribe them for the same job in a world that was entirely unsecuritised. A token on the other
hand is represented as:

Value/Utility

wherein utility is never offset against some sort of net exploitative aspect of value
enhancement. This is purely logical, for as we have discussed above, a token is a blank
canvas when it comes to value ascription. A token could hardly occupy a status of open value
if it was simultaneously acting to offset some form of utility to maximize or enhance certain
value features in its composition, or else that value by definition would no longer be blank
canvas but rather, manipulated, or if you like, painted on already.
Ascribing dividends to tokens and coins then is not just counter-intuitive, it is more likely
over the long term to lead to a net negative Utility/Value equation for Blockchain
participants, which will result in the overall decline and perhaps, ultimate diminishing of the
power of the network.

Here is another potential issue with DAO structures: they often seek to circumvent securities
law in the United States with the end goal of handing profits back to the purchasers of tokens.
By doing so, DAO structures undermine the core value proposition of the Blockchian, and in
turn, further weaken any chance of its evolution as a fully-fledged Value Coeval.

In short, there must be fundamental utility driving value production on the Blockchain, or
else the Blockchain is a redundant, rather than a radical technology, in the sense in which it is
being employed at that moment. Thus, when developing a decentralized hedge fund, one
must take into consideration that a utility function should exist for the holders of the tokens
of the fund. This presents a potential dichotomy, since hedge fund investors are the
archetypal lazy man investor. How then to resolve the paradox whereby a hedge fund a
vehicle for the idle rich to notch up gains with little to no personal effort expended can exist
on a heavily engineered, predominantly utility-driven platform?

The answer to this question, so far completely unexplored in Blockchian innovation is

simple: fake it. By which I mean, develop a synthetic utility that in every way mimics the act
of work but in reality by nature of cutting down the amount of work expended and driving up
the return function, serves to do the opposite of that which the ledger system was intended: to
harness the Value Coeval as mechanism by which fast, abundant and constant returns can be
driven in an easy-to-use, fast and naturally demand-enabled way.

6.3 Fractional Utility Synthetic Mining For Exponent Value

Mining both digital and natural is one of the most utility-driven mechanisms of value
production. It always involves work hard work. What though, if we designed a core Crypto
currency that mimicked the effect of being mind while being employed in a pure game of
value reproduction on a consistent basis? The resultant task of this process of Value Mining
would be nothing other than the creation of Blockchains first universal, multi-purpose, easy
to use and fully-functional global currency.

This currency can be named by its pure intended utility function: MNY.

7.0 Value Mining

7.1 Types of Synthetic Utility
In finance, when someone speaks about synthetic value, they really mean an asset
which is somehow non-organic but derived from another asset from/within the same
ecosystem. Foir example, a Waves version of Bitcoin could be called a synthetic
bitcoin; an Ethereum token could be understood to be a synthetic coin (being as it is a
smart contract-enabled tokenized form of a coin). Thus, synthetic value is value that is
reproduced by mimicking the effect of an asset and replicating it in an alternate state.
Subprime housing derivatives, which mimicked the repayment of commercial banking
loans by replicating them in a collateralized form, were another good example of
synthetics. Usually, something synthetic has some sort of conceptual ascription
attached to it that is necessary to justify its state of being (in this way one might
consider the United States dollar to have once upon a time been a synthetic form of
gold, back when it could be exchanged for gold bars).

Synthetic Utility is no less conceptual, although it is a bit more unusual, since it is not
usually the case that one attempts to mimic the process of doing work for the sake of
creating value (it is much more commonly the other way round).

When we think about utility in Crypto, it is predominantly the following activities that
come to mind: programming, mining, trading, holding ICOs, building blockchains and
other technical activities. Of these, the activities that are easiest to synthetically
replicate will be the dumber-sounding ones of course building blockchains sounds
like it is definitely off the list, for example.

7.2 Triple State Coin

7.2.1 Overview of Synthetics

In designing a form of synthetic utility, we want to make it clear on the label how
many functions the coin fulfills, since this is one of its core Utility/Value propositions,
remember. Thus, in our deployment of a coin that can be used to activate pooled
mining rigs, and/or used to purchase premine ICO tokens prior to exchange listing at
discounted prices, and which can be swapped for/with other altcoins in the Blockchain
market, it feels appropriate to describe such a coin as being in a triple state of
Utility/Value at any one time.

Note here that while the coin might take a lot of work out of the process of making
money from the activities in which it is engaged, this doesnt mean it is a security.
There is no promise by the issuer whatsoever, nor is their any reliance on the part of
the issuer what the buyer gains from holding the coin. Other than that generalized
benefit one obtains from retaining the same clientele over time, the company issuing
the coin is not a beneficiary party to the coins success or failure on the market. In this
way, Premine, the first triple state synthetic utility token, will be a truly innovative
product in and of itself.

Its hard to overstate the extent to which such an innovation is pivotal; we have, for all
intents and purposes, minimized utility to its absolutely most core and basic function
the act of taking action in itself and transferred a significant load of the value to that
of a market-modelled multiplier effect, enhanced by the exponent synergy inherent in
the value coeval. This in itself is a groundbreaking premise that it stands is likely to be
copied many times over and varied accordingly from this moment onwards.
7.2.2. Coin Exchange

PRE/MNY Rate: This pre-set off-market rate
MNY
is set by the rate at which coins were
received in the previous calendar quarter.
Therefore, an increase in the rate shows PRE nestles between a
growth of the core exchange utility on offer state of Utility (see: Triple
while a declining rate may show either State) and Value, and a
higher demand for PRE or a decrease in the significant amount of
appetite for exchange utility (or a better- MNYs Value is derived
than expected ICO market overall) from PREs core utility as
an option/swap

MINING PRE X-CHANGE

Each of the coins states can

be understood in the
Utility bowel; PREs triple-state context of the Value Coeval:
functionality ensures constant Mining Utility is Value
utility in all directions of Crypto Chain; ICO Premine is Value
value production Shop; X-Change is Value
Network

ICO
PREMINE

Figure 8:Diagram showing how the Utility Bowel interacts with 3 states to produce the Value Mining effect

Premine (PRE) is a token determined by the rate of market growth of the underlying Monkey
ICO universe; depending on whether the market is a) growing or contracting in the first place
and b) growing more or less quickly than the supply of MNY, PRE will expand in total
number of units or contract.

For instance, assume the market is growing 1% in the previous month period and that MNY
issuance grows by 15% in the same month period. In such an instance, PRE would purchase
1.5% more coins in the following month period. These tokens would be issued and sold by
Monkey into the market in the same way any seller realizes an investment on exchange;
either via selling through the order book or by hitting the available on-exchange bids.

PRE is first and foremost used by holders of the coin to realize additional issuances of ICO
tokens. If PRE gains during the current month period then the PRE sent is returned with
additional MNY according to the formula
Cryptocurrencies must be ranked fairly and comparably against one another according to
Class upon receipt, thus they are compared to one another according to their trading volumes
and market capitalizations, which are individually compared to the average 30-day trading
volumes and market capitalizations.

From this comparison, individual category Points are scored. The Points are then added up
along a row and averaged out to give the percentile-proportionate share of tokens that is
ascribed to each Cryptocurrency sent to that months wallet address.

MNY Token A Token B Token C

Market Cap $100,000,000 $400,000,000 $900,000 $89,000,000.00
Volume $1,000,000 $5,000,000 $120,000 $1,850,000.00
Points (Cap) - 4.00 0.01 0.89
Points (Vol) - 5.00 0.01 1.85
Points (Avg.) - 4.50 0.01 1.37
New Issuance - 76.52% 0.18% 23.30%
Tokens 40,000,000.00 30,609,642.04 71,422.50 9,318,935.46

Figure 9:Table showing how 3 Cryptos compare with MNY and with one another to receive 40m MNY issue

If the amount of altcoins received is greater than the amount of PRE received the previous
week then the altcoin senders will be granted 100% of the MNY issuance reserved for them.
If however, the amount of altcoins received is less than the amount of PRE received, then the
percentage of which the altcoins constitute the amount of PRE received multiplied by the
MNY reserved for the altcoin senders is what is sent back that month.

The Coin Exchange tool effectively constitutes a synthetic mining of MNY utilizing the
Premine coin in conjunction with any other coin in the market. Furthermore, since issuance
rates are tied to market performance dynamics, the issuance factor is entirely demand-enabled
and not supply-drawn. This superior method of mining means that over time, substantial
amounts of MNY can be created and issued in the form of circulating supply without the
requirement for being immediately sold, thus creating a profound and aggressive issuance
factor growth rate which will arguably lead MNY to become the leading Crypto by market
capitalization (which is how they are ranked officially by Coin Market Cap, our benchmark
index measurement here).

Further, it bears mentioning that not only is the synthetic mining process a pure market-
oriented form of utility, it is also one in which value is engaged by means of being tied to the
comparable receipt of different altcoins over an extended period of time (in this case, the past
30 days of market performance).

Overall, by creating the Coin Exchange we have thus successfully mimicked the act of
mining employing a fraction of the utility required normally to do so while still in some sense
maintaining that utility and hence, exponentially increasing net present value.
Conclusion: The Non-ICO Approach
Crypto is a strange world: it is one where anyone can play. As a result, pretty much every
time of vagabond, broker, criminal and intellectual can be found working under the guise of
developing some sort of Blockchain application or another.

As a result of the wide variety of actors, there is a strong tendency towards deep suspicion, if
not outright hatred of ones opponents in a way that one does not commonly find in other
industry segments. This deep animosity was what initially caused so much tension in the
Monkey project.

Part of the problem is that there is a high premium on genius in Crypto. As a result, many of
inadequate intellectual strengths end up competing for a prize they stand no chance of
winning.

In order to properly engage and mature the market, its essential we get away from this mode
of freak-on-freak destruction. Blockchain, after all, is about building things, not tearing them
down. Too often, however, financial profiteering becomes the dominant article in a Crypto
community.

This is a problem I am deeply committed to solving: the idea that financial gain is more
important than the errors made that led to its eventual surpassing of the present; the notion
that one mans market value is higher than another because of the amount of stuff he
possesses.

The notion of Synthetic Utility and Value Mining strike right at the core of the very worst
aspects of Crypto. Specifically, they at first democratize the paradigm under which ideas are
produced, by opening up the premine to a wider investing audience. Second, they protect
against the inherent volatility of the sector as innovation is attempted, thus encouraging and
giving rise to the propensity to take risks.

Over the long term, this can only be something to celebrate.

 Afterword

Aire To Heir A Private Conversation Between Billionaires

The following is a transcription of a private discussion between Bank Thepcharoen (bold

text), the heir to Thailands largest property legacy Nusasiri PCL, and the locally-famous
entrepreneur Asong Shanmatkit (normal text), who the CEO of TV Direct PCL. The discussion
reveals some wonderful insights not just into the Asian business psychology but moreover into
a socially-conscious method of sales and marketing.

Thanks for your time today.

Youre very welcome.

So can I casually call you Asong then?

Yeah.

For this interview we are really here to discuss entrepreneurship, and to some
extent the entrepreneurial networks that you as a very successful entrepreneur live and
work within and around. So it would be good if you could start by telling me a little about
yourself. I dont mean telling me your profile, or any of the standard stuff you see
everywhere, the boring marketing stuff the company puts out but rather I mean about
you personally, about the man Asong
Ill start with my name then. Im Asong Shanmatkit. I can say that I have been an
entrepreneur now about 23 years, but in fact I was taught the lessons of being an entrepreneur
many years beforehand by my grandfather. One night when I was just 12, he sent me out with
one driver to go and release the water in the farmland from the dry fields and then go around
afterwards collecting all the money for this. We are talking about a really remote area of
Thailand and there we went straight to the fields. In the summer time all the ponds had about
a liter of water in them, and we would dig the soil so the water would come out. Every dig we
did cost about 20 Baht, I think. I have been negotiating since that day.

So you mean to say youve been problem solving and negotiating since 12 years
old you were born with it in you in other words?
I am not sure if I was born with it or not but its the way I was taught to do things from
when I was very young. I am the third generation in my family already and my grandfather,
noticing this, assigned me to this task one day where I had to go out and work in the middle of
nowhere; the one that I just told you about. And you know during the 3 days I was out doing
that it was just me, this kid of 12, out in the field with one truck and a driver. Since it was just
the two of us, him and I, doing all this work and collecting the money afterwards that meant
there was no time for sleeping when we would finish somewhere. And we had to go find
something to eat by ourselves, some sticky rice or pork or whatever wed just eat these snacks
because wed be really hungry after doing all that work. We eat anything we could find. The
whole thing made a big impression on me about the importance of self-reliance I think very
early on in life.

Thats a very interesting introduction. Its very personal, much more than I would
have expected. So this point, when youre 12, thats what you would call the critical point
in your life that has influenced all the other major junctures of your life beyond then in
a way?
Its fair to say that is true, yeah. Thats what comes to mind anyway when you talk
about entrepreneurialism.
Because what we talk of as entrepreneurial activity is essentially part of a life long
process of surmounting challenges, and that has to start at a certain point, and it can only do so
when you reach a personal tipping point of sorts.
Those 3 days out there all-alone at 12 years old with a driver digging holes and then
getting paid to do these things but also following up to get ourselves paid thats what gave
me the entrepreneurial instinct. I dont know if we made a profit or not. I mean, you have to
take into account the cost of the petrol, the drivers cost and so forth, in terms of doing business
as an entrepreneur that is, and I didnt know about any of that then. I just did what my
grandfather showed me to do and I charged customers 20 baht ($0.8) each. But it came to 3000
baht ($100) in total at the end. We are talking 30 years ago: 3000 baht was a lot of money back
then.

Honestly I was not prepared to hear something like this. Youve brought up so
many critical issues I had all neatly prepared to go through, and in the process I think
weve skipped past a lot of stuff too, but lets stay with this for now. Does this mean you
were brought up with the entrepreneurial ideal in the family to some extent? I imagine
so; otherwise whom else did you get it from? The driver? The reason I ask this is because
my Dad has always said, If you want to be the boss you have to learn how to do the
cleaning, you have to cover all the bases
Thats right, thats right. Your Dad is completely right you have to know it all; you
have to do it all. And you have to start with something very basic. If you cannot get the basics
then you cannot get the foundation. And that raises another interesting point as well in the
story, because for me at that time the only thing that made me survive that 3 days out there in
the rural heartland is an instinctual sense of survival which I guess I also discovered that I had.
Theres a really important part of my background you should know here. My father died when
I was only 4 years old, and since that point I had lived with my grandfather. My mother
remarried again when I was 11, but I still stayed living with my grandfather even after then. So
that is why my own sense of survival is a little bit higher than it tends to be in others, I think

You mean to say that whereas others might feel sorry for themselves and think,
oh, how poor am I, that you were able to visualize the pros, or you were able to see the
good in all that could come from everything? I mean, you were obviously aware that
Daddy wasnt around, but you were still able to see the silver lining, I guess?
Well, even today that is true in fact! Tell me, do you believe in the importance of
consequences or not?

Yeah
Right, so central to that is the notion that one consequence always gives rise to another
consequence later on. If my Dad hadnt died when I was 4 years old I would never have learned
all the very different and the many things I have learned from so many other people today,
because I would have had him to learn from instead. So I might have ended up more spoiled
than I am today and I certainly would not have ended up anywhere near as experienced. Instead,
because he wasnt around and we had to survive I learned very quickly from a wide range of
people. I got the Pembridge School scholarship and went to Assumption Commercial College,
and after I got my diploma at 18 I began working and took evening classes at the same time at
ABAC. This is how tough we had to be

So what are your working hours like?

You mean at that time, or when? Nowadays?
 Yes, now.
Twelve to fourteen hours a day

So thats less now than you are used to working before?

I think its always been about the same in that I start at 7.30am here, and get into work
to go through and prepare all the documentation that I require for meetings you can see my
meetings actually, this is my whole damn day for every day take a look at that calendar

Your secretary packs you a very tight schedule, man!

Because I see value in the time I spend working. It comes from when I would study in
the evening and work in the daytime from the early days. Thats why! Ive always had to
manage my time right all the way through my life. After I get home even if the kids are sleeping
I get them up and play with them so I also get to spend time with them as their father.

So you find a way to balance your working and your family hours, then?
Yes but also sometimes on Sundays we have so many e-mails coming through during
the week that I have to answer e-mail then, so in that case I am answering e-mails and getting
back to people about work-related stuff on Sunday but I am still around at home with my kids
at the same time.

Thats a good way to spend a holiday! So before you were a family man did you
work 7 days a week then?
Yes and I played 7 nights a week. And every night we would all go out together
drinking

What would you say lets say you had the chance to do everything over again.
Would you still do it like that? Would you do it the same way with the working and
partying and drinking all of it together?
Yeah, I would do it the same. Because all those experiences that I had are what make
me what I am. I didnt drink for 15 years at one point. I drank so much before I got married,
that after marriage I was just able to give it up completely. Although I did start drinking again
about 2 years ago

So you stopped for 15 years and then started again 2 years ago?
 Yes, cause we listed on the stock markets so there was all these constant drinks and
entertainment going on all the time. After 5 months of going to these things and abstaining I
decided it was just better to join in a bit.
So your early days, it sounds like you partied a lot, you made a lot of money; you
spent money and all the time you were essentially living day to day. What was your
goal then is it where see yourself today?
No. I actually didnt set any goals! We just did every day the very best we could. Im
still like that, too; I spend every day living like tomorrow will be the day that I die, because
when that time comes, it comes. And you know what, to do the TV Direct thing, Ive only been
able to do it because of the sheer amount of experience I have accumulated in the past form
having this mentality and living this way.
The first job I had was trade operations. Id take care of documentation that was
required to export chickens. And it was really interesting because one chicken container would
cost you about 3 million baht and if you didnt have the certificate signed by the owner of that
container it wouldnt be able to come out at all. I dont know why but wherever the owner is
meant to be when you have to get him to sign, you can be sure that guy wont be in the place
he should be. He wont be working there or hell be somewhere else in Bangkok: anywhere
but where you need him to be! But I would need their signatures to release the containers and
actually make any money, so I would have to get it. Then after that I became a trader doing all
the import-export stuff and we had so many different products that wed deal with: egg yolk,
buffalo horn, buffalo stew, crab shell, crab chip, rail rod

Hold on. What prepared you then for that? It sounds like between vegetarian
goods and chickens and rail rod, that theres nothing you could have learned at business
school there to prepare you sufficiently for any of that?
Yeah, thats right, but thats exactly what gave me the structure and the outline with
which I learned to do things. At that time we didnt have the internet, just the telex system, and
so the telex would come through with some item like TOA or crab shell and I would have to
go and source that product and be really creative about how I did that. I would go to Vietnam
to get the crab shell, and you know how I would get the crab shell? Straight from the seafood
restaurant! And then Id have to dry it and milk it and ship it to Japan. But it was worth it
because those crabs were good business: 1 metric ton would cost around $1300, and we are
talking about 25 years ago! There were lots of things like that which made for great business
if you could find a great source for them: there was squid for instance, that was very popular
and the margins were good. I even remember selling a second hand Boeing from Russia,
actually.

How old were you back then when you sold the Boeing aircraft?
I was 18 to 20, somewhere between there. I was young. But my superior Vichai was
very good and I could ask him anything and he would know absolutely everything about it.
Anyway, this is why when I came to TV Direct I was able to sell everything so easily because
I understood the fundamental rule of sourcing and selling products is that you can only do it if
you apply an individual criteria to that product. Whether its a pen or a cup or whatever it is
that you are selling, each product has its own range and breadth of new product knowledge that
you have to engage with and apply to the sale individually. I knew that because I had used that
understanding to sell stuff that was really tough to sell already, like bamboo skewers. I sold 34
kg of those things!
So at first then with TV Direct you went out there yourself and sourced all the
products? Thats pretty tough!
If you want to move a business forward the leadership has to be there like that from the
very start. To start with we only had 1.2 million baht of registered share capital, so we had to
do everything by ourselves. We would even sleep in the office.

I can see even at this hour in the evening that there is still a lot coming in and going
out; its impressive to see! So I want to get a bit more specific about the culture of TV
Direct as you have tried to build it and create it. This is another question that is just
coming from the top of the head, but how do you go about getting people to love the
company the same way you do even when its not theirs that they have started
themselves? What I mean to ask in particular is how do you get people to go beyond the
call of duty and work for the goal of the entire organization rather than just for their own
benefit?
I can give you 2 ways how here. The first is that you show them how to do it first. The
only way to show them is by doing it yourself. If you want them to go early you leave early
yourself; if you want them to leave later on, then you leave late yourself. Secondly you have
to talk and do at the same time the problem with other companies is they say something
exciting and they dont follow up on it, or they do something great they dont tell anyone about
it.
 You mean the companys leaders specifically here?
Well, actually this is a human problem, not something necessarily specifically related
to just upper management. The problem with Thailand especially is that people tend to interpret
your words in any number of ways that suits them when in fact the words as you speak them
only have one very specific meaning for you. The way to counteract this is to show them what
you mean as you say it. For instance, if you say love, you have to mean love! So when you say
you love someone, you have to say you love the good and the bad, not just the good things; or
how can that be love? Similarly, to take the analogy to a level how we might apply it here at
TV Direct, we know that people have good and bad points, so once we hire someone we
understand that we have to accept they have good bad results when tasked with different things
and some positive and other negative traits.

So there is no textbook characteristic of a good employee then?

I would say thats right because I am coming to this not from a theoretical but from a
practical standpoint. A week ago we hired a consultant to do some project inside here and I
paid them 10 million baht. At the end however all we got is theory, theory and more theory. I
come from the standpoint of practice. In most organizations in Thailand people do not have
very much integrity in fact. We try and make people have a bit more integrity by switching
their roles around a bit and also I try and empower them, too. Sometimes that works and
sometimes it doesnt. Its probably about 70/30 in favor of those things working: again, it really
depends on the person.

Well, yes, that is true. I like the methodology you use, its very similar to what my
Dad has always aught me he is an advocate of throwing you out to sea and seeing if you
can get back to shore. And, why not, if youre good enough if you want to reach
somewhere theres no bettered way that to swim there yourself.
Its true for some people, like I say. Your Dad can apply this technique with you and I
believe 100% that you would survive. But if your Dad tried this with a subordinate, they might
not thats really the difference between entrepreneurship and being an employee however.
There is no training to becoming an entrepreneur. Some people genuinely do not want to take
on the additional responsibility this type of person is not an entrepreneur. I dont want to be
the supervisor or the manager, I want to be the one who takes on all the responsibility instead.

You mean its a good or bad

 No its not about good and bad. In any organization you cant have one type of
individual. Its about getting the mix right, the right mix of everything. Having a lot of people
who are ambitious is in fact just as bad a thing as having no ambitious people at all, because
no one will stay in your company very long if they are all ambitious. You want people to stick
around, you dont want people being always active and taking up every opportunity that is
presented to them. To be completely honest, most loyal people are not that ambitious, because
if they are ambitious then they tend to want more than you give them.

Really?
Well, if they are really ambitious then they have so much ambition they want their own
the business at the end of the day.

So do you want someone loyal to your company or do you want someone really
ambitious and pushing the envelope all the time and growing the business for you? Thats
hard to say.
Yeah, its hard to say many small companies have this challenge. They work with
the owner and then one day they resign and set up themselves as a competitor, because if you
are the right hand man you know it all! And theres a day when you stop and think: why do I
need to work with you [the boss] when you never come to the company? I know the customers
and I know how to cut costs and make this service more attractive for them These are
ambitious people but not loyal ones. You will never find someone like that who is 100 percent
loyal, ever! You will never find someone who is 100 percent loyal and 100 percent ambitious!

You mean inherently, these two traits dont mix?

It cannot be both ways, no. You may find someone like this but if so then maybe its
something very, very small like 1 in 10,000 people

How do you still at this stage come up with original ideas? I mean, TV Direct has
always been so original in its thinking, how do you keep that originality going after such
a long time
You mean in terms of generating the ideas?

The whole thing. The innovative thinking, everything that makes the company run
and continue to shine
 Creativity and innovation is about two core elements being essentially integrated in a
single process. Those two things are experience and knowledge. Once you can bridge these
two factors together into one, then that is the point that creativity arises.

Well, you take a different view to creativity than as it is defined in the book
Thats because the book talks about averages and focuses on fashions

The textbook definition tries to explain it as something more tangible, yes.

To be honest because of the experience side of creativity I think our best ideas came
later, not right at the start. Also, the medium changed. TV shopping, which is where we started
out, is about one medium, whereas direct marketing is multi-media there are multiple
channels of distribution involved.

So you have adapted a lot as time has gone by then?

Weve had to.

I mean, TV will die soon

Thats right. TV will die soon.

So with all this success youve had adapting ahead of the market as its continually
evolved, where does the struggle come into your story? Whats the biggest mistake youve
made made? Personal mistake, I mean
One of the biggest mistakes I made is in managing people and specifically, selecting
the right people. I have had to learn how to live with people. There are some people I stayed
too close to for too long and some people who I kept too distant from me for too long. Thats
a big issue, because at the end of the day my business is all about people. Now I make sure I
go to the call center on days when the sales are way up. Ive found I dont even need to do
much but give them all a hug, play with them a bit, or sometimes give them money and rewards
for exceeding targets, and it really helps things in terms of morale and performance. The
problem is when you start doing these things you think: Why dont we do this every day or
every week? And then you have to ask yourself: how much of this kind of thing is too much?
How much is not enough? Its in these areas where we made mistakes. Often what has been
necessary is getting outside of the immediate environment you are in.
 You mean expanding your network from outside, not from within?
Exactly.

You talk a lot about adaption and response. How can you make a successful man
out of someone whos not naturally that way inclined? Or a good employee out of someone
who doesnt necessarily have the best background or attitude? How do you change these
kinds of fundamental things?
Talk. Find a way to talk. You also have to find activities for people to do together so
they can better resolve problems that way. You have to find a way. as a leader, you can stand
a little further back than normal and let them find out how to help each other, too. Let them
find out for themselves what its like to be in someone elses position. I get people who work
in the call center to make deliveries some times. Or I got one of the finance department
personnel to handle the media buying strategy one time. It was amazing because she became
so good at the media side of things in the process! If everyone understands everyone elses
problem then things work much better. But if you are going to do this youve got to implement
it on a case-by-case basis. Each person lacks a competency in some way they might be good
on calculation but lack the human touch, for example. So in that case you have to task them
with a role that allows them to gain experience and understanding of the human side of things,
like customer service or sales. Ive actually spoken to the psychology professor at
Chulalongkorn University about this. In fact, I recently brought 5 of our employees to see him
and just to discuss various philosophical issues which I thought they might find helpful. A
really interesting point he raised was that because a dynamic is not equal, thats what makes
it equal on balance. So, for instance, lets say that I have 2 subordinates one is fat and one
is thin. I go to London for holiday and there I buy them both t-shirts from Harrods as souvenir
gifts to give them when I return home. If I buy two small size shirts as souvenirs then one will
be the wrong gift; equally, if I buy two extra-large size shirts one will also be the wrong gift.
Only by purchasing two different sized shirts will I be able in fact to be truly equal in the
way that I am giving.

Thats deep. You obviously have a huge amount of insight into those around you
who you work with, so lets look at you as Asong the man, the individual, for a second. If
there is one thing you are known for more than any other, its maybe your ideas. Can you
talk a little about that process? How do you know when something is a good idea versus
when its a bad idea, too?
 When I get new idea I call my friend, he is the CEO of a major Asian conglomerate,
and I tell him: lets go for drinks tonight! I sit with him and talk with him, so the idea is
bouncing around, and we are throwing out additional ideas all the time at this point that are
related to the original idea I have. I know how hes gonna start though: with the idea that its a
bad idea first. After about a couple hours of good versus bad, then we have a few drinks and
talk more casually until late in the evening. The next morning when you get up and take a
shower thats a good time to retrieve all the ideas youve discussed and gather them in your
head, so you come to the office and say, hey guys, I need some consultant to work on this
So this is the way we work with my ideas. Once the idea has been tested, then sometimes it
works and sometimes it doesnt.
My best test actually is the method of asking the maids around here to try something
out they have actually proven to be really useful in this regard. If I ask them they will be
frank and say, No this doesnt work, I dont like it. Similarly, when it comes to kitchen
products, polling the cleaning staff first as to the products genuine effectiveness has proven a
good method of assessing likely market demand maybe 65% effective. So in answer to your
second question, we test. We actually test the idea in a controlled environment, too. Thats how
we know something is likely to be a good idea or not and dont waste unnecessary time on
ideas that are unlikely to work.
In many ways, I dont believe in myself any more as the primary indicator of whether
something will succeed or not, definitely not if what I say is contrary to the results Ive gotten
back from the controlled tests weve run. The first product I didnt think would sell at all in
Thailand was something called the Abdominizer. I said to my staff we are never going to sell
this fucking product for 1000 baht ($30) in Thailand, never! And the product guy said: well,
you can try. Just give it a try. So I did and we didnt sell any at all and I came back to him and
I said It doesnt work! I told you it had no chance. He then gave it a try selling it himself,
but he modeled the sales presentation the same way the Americans sell it, in the same style,
and the thing sold 175,000 units. We are talking about 1,290 baht ($39.99) per item, so it was
a huge one-time sale. Now I test everything first.

In 20 years give or take, what will you be doing?

I think I will be a very good consultant for many companies.

Still in business as an entrepreneur?

 Yeah, but I might not have a business in the future. I have other interests I want to
pursue, other that running a business that is. For example, I have a book I want to write, many
of them in fact. In 5 to 10 years I want to find other things that stimulate me, not just running
a business. That was never my aim or my goal, in fact. Certainly not to run a public company.
I just ended up here.

So business wasnt so much a passion as it was a necessity to you then?

Thats right, but at the same, you can be passionate about everything you do. If you are
passionate about something, and you live with your passion, itll rub off on everything else.
You can find this trait in all entrepreneurs. Thats especially true in the case of your Dad, in
fact.

My companys slogan is actually Driven with passion

Really? Thats very interesting. You see

I think thats a very good note to wrap this up on, actually. What are the 3 pieces
of advice you can give to college students who want to be where you are now one day in
their future?
Dont be fooled by authority. Once you have power, and authority, it makes you
different. If you want to be the boss, dont get fooled by it.
Second, see people as people, not as working machines, not as software programs
not as parameters through which you shoot targets. Many people in this company used to view
people as parameters. We had to change that, make them see each other as people. Third, be
passionate. Once you are passionate you will have the ability to agree to disagree, to see things
for what they are and address them correctly. Thats all there is to it!