What is a Crypto Equity?

What is a Crypto Equity?

What are crypto equities? Why do we need them? In this short video, from the heart of the Wynwood district in Miami Florida, I explain the answers to these ...


What's up party people? It's Chris Derose. The Community Director of the Counterparty Foundation and today I wanted to answer the question, what is a cryptoequity? A cryptoequity is a new kind of term and we know what traditional equities are. We think that cryptoequities are going to be something pretty different. There's a lot of different definitions going around, and it's kind of up in the air so in many senses it's what we make of it at this stage, but there's a couple things that we know it is. Right off the bat we have counterparty assets. Counterparty assets are digital assets, they don't take up space per say, or they might but they aren't managed by a central authority.

In some ways they're kind of parallel to what you would see perhaps in a DNS model with domain names being handled as a scarce resource by the ICAN [SP]. Of course in the case of counterparty, and of course in the case of cryptoequity, there is no central holder, or central clearing house or central repository for these equities. They exist as assets, assets themselves are up to users to define and you can call these assets whatever you'd like. In traditional equity terms, we have things like stocks so maybe you have a website venture, or maybe you have a new VC funded or Crowdfunded venture that you want to do. You can define shares, you can define the name of your company as an asset name and you can declare that to the network and you can declare that as having x number of shares. Maybe you have 1,000 shares or 100,000 shares.

Maybe these are non-divisible shares, thee are non-divisible in the sense that they don't have sub-units. They are just tokens that are themselves a percentage of a a whole. Those would be a very bare bones definition of what a cryptoequity is but it goes a little bit further from there. Cryptoequities can also be things like tied to tangible goods. Maybe you have a bank of gold or copper or some such thing and you want to declare to the network that you are the holder of that repository, that it is yours but the equity itself is decentralized and it is declared on the network and it represents some fractional holding of that store of that traditional commodity. In some senses, in that case it's a bit centralized and requires trust upon the person declaring the asset but certainly is doesn't require trust on the part of the clearinghouse or the counterparty agent.

That would be another use for cryptoequity, but there's more exotic definitions of cryptoequity as well. These could be things such as karma perhaps. Maybe what you do is on a reddit type site, you issue karma for people who contribute content. This content is itself a fractional share of perhaps the advertising revenue. That would also be a new form of cryptoequity and we don't really know where this is going but these are the types of things that people can start doing with counterparty, with cryptoequities and these are the types of directions that people will take. Right now there is a [inaudible 00:02:27] project, which is a bridge between the old world of equities and the new world of cryptoequities.

That project is still in development, it's too soon to talk about and we will see what happens but you'll start to see the divide between equity in traditional shares and safe models and the cryptoequity model start to blur perhaps over time. What we can be certain of is that cryptoequities are decentralized. They are tied to the security of the network in terms of a cryptographic scarcity and they will be available through protocols like if not, certainly, counterparty and they will be done by people like yourselves, so go ahead and create your own cryptoequity. Show us how this is going to work in the modern world and show us what you're doing with it. In fact when you do it let us know. Send an email to me.

I'm Chris at I'm also derosetech on twitter. Show me what you are doing, maybe tell me about the problems you are having, see if I can help you, ask some questions. Subscribe to this video if you like it.