Network participants and organizational value

I’ve found the discussion of providing a share of an organization’s upside to network participants fascinating.

A quick recap:

• Fred’s post on networks mutualizing.
• Brad’s thoughts on competing with established networks through innovation in ownership and governance instead of features.
• Naval’s post on the Bitcoin model for crowdfunding.
• David Johnston’s white paper on Decentralized Applications.

Assuming the following scenario, I have a number of questions that I’d love insight on.

A company for knowledge sharing across a network wants to implement some form of mechanism that will enable users who create value to participate in the organization’s upside.

The concept of a mutual company or co-op presents legal, funding, and other challenges.

A completely decentralized company may not make sense in the earliest years as some central governance and control can help as the network scales.

One possible solution that’s appealing is to start with a centralized company that creates a fixed amount of currency, call it Wikicoin. Instead of mining the currency, the organization distributes Wikicoin to network participants as they contribute to the network (creating content, curating, etc.). Governance is determined based on share of Wikicoin ownership and so overtime, as the network scales, governance and oversight becomes increasingly distributed. Perhaps in parallel the organization can move down a path toward being a fully decentralized application as predetermined milestones are crossed.

Questions based on this scenario:

(A) Assuming that in the short term the only use of Wikicoin is to trade it via exchanges, what does this mean from a regulatory perspective? Is Wikicoin simply a proxy for shares in the organization?

(B) Since Wikicoin isn’t associated in the short term with transactions that have monetary value (such as buying and selling storage on a decentralized storage service with Boxcoin) the transaction costs of using an existing protocol become problematic. Are there solutions to this that don’t require investments into infrastructure such as wallets and exchanges?

(C) If the organization raises investment to help build the network, does it do it via a sale of currency or via ownership in the organization? If via ownership in the organization, what’s the end game that creates the liquidity and return?

I’ve posted this to USV.com, any insight or comments you have can be shared there.