Topic: Open Business (Read 804 times)

I thought that not being "legally recognized" is exactly the same as illegal.
There would be no corporation in the legal and fiscal meaning (currently). And without corporation, in France at least, you are not authorized to do business. (Which is costly and a nightmare you can't easily undo unlike the UK... sight)
There would be no "normal contract law between individuals", because nobody know who these individuals would be.
I say "bypass", because if there is fraud, there is no legal recourse possible for the investors. Investor will need to protect themselves with a game of incentives, not by law.

This is what I don't understand, would such "Memorandum of Association filing" would permit me at will to emit CC and distribute any profit directly to anonymous CC holders in real time, legally, to thousands of them ?
In France this is unthinkable.

If I did an Open Business, you can be sure that I would not pay any taxes and keep my anonymity. So I would really not care about the tax sheltering services of legal corporation.
I would pay my taxes only when officially recognized by fiscal authorities and government. Making otherwise would be a financial suicide. (at least in my country)
Same incentives hold for Investors getting real time profit from sells.

Interesting, but such contract is done between which parties ? The Founder and Investor ?
If Investor wants to trade the CC on a free market, can such contract be "binded" to the CC ?
Any legal precedence of such "public shares", that bypass traditional financial markets ?

Yes, would be good if it can be legally recognized. But while it is not, if I don't pay taxes on the profit, I don't really care about having subsidies. If I lack funds, and the business is profitable, then I emit more CC to expand.

Agree on this point, there is some business model that will not fit into an Open Business.
But all business model that can start small and make small profit can grow more thanks to the increasing trust of Investors that attract capital as it growth.
Employee payement can be included into the "charges" that I talk about. (only the margin will be distributed to investors)
Some employees can share the incentives of Founder : some CC.


I am not sure I understand what you mean.
In the "Risk Mitigation" part, I talk about making the CCKey and PaymentKey both 2-2 multisig and requiring the Founder to buy some CC (thus sending money to CCKey), so it gives incentives to not fraud.

 Electronic Signatures are recognized by the court, how to go about it I don't know, but contract law is all we need, loose association business for legal and taxation purposes, each person pays their individual taxes. I believe it is called a Co-Operative, it is a very legal form of association. Just have to sign up members that's all.

 So we have everything we need just need to outline the internal structure and interface of this Co-Operative. Now achieving a international Co-Operative... that's going to be interesting.
 
Write up the Co-Operatives mandate and policies Open Source style and watch the people develop the idea, There is no shortage of people, just lack of purpose and direction.

This assumption is invalid.  The corporation would simply not exist, and the courts would interpret the agreements through normal contract law between individuals.  So you aren't bypassing the legal system, in fact I think you're boxing yourself into a corner.  


Definitely we should create the right incentives!  But this point is orthogonal to your earlier one.  


When I say that the company wouldn't be "legally recognized" I'm not saying that it would be illegal.

Also, we can't (yet?) opt-out of our legal jurisdictions, so your just "pretending" to.  


If investors and founders earn a profit, taxes will already be owed.  They'll simply be liable for them personally, rather than being able to use some of the tax-sheltering offered by a legal corporation.  


I think you have lots of good ideas, but I think this will fail in practice when it comes to attracting capital from serious investors.  If your business model is simple (e.g., just-dice.com) or very small, then, sure, we already know this model can be made to work.  But if your business model involves research and development, renting office space, manufacturing equipment, salaries, etc., then I don't see how it will work.  How would you even pay your employees?  And what if you wanted to take advantage of government subsidies like the SR&ED tax credits here in Canada (that make research VERY affordable)?  Again, why would you want to box yourself into a corner?  Perhaps all that is needed is a Memorandum of Association filing and then you've eliminated all these concerns but can otherwise largely adhere to your proposal.  Is that not worth it?

I also think you are confusing "Big Government" with Common Law and Civil Law.  In my opinion, Common Law has always been decentralized and even sort of p2p.  Sure, we have lots of crappy ridiculous laws on the books, but the Common Law system is sound IMO?  It is just like bitcoin: it will adapt as the times change via slowly-evolving legal precedence.  

If we could start to see some legal precedence that binds public keys to unique humans such that DSA signatures are widely recognized to carry weight, I think this would be a step in the right direction.  

TL;DR

But, how about both the worker and the boss submits the equivalent amount for the cost of the work in an escrow type of service as to ensure one that this business anonymous as they maybe will not screw them over.
Once the job is done the money is released.
They both have control of their assets until the deal is completed.

You may be interested in reading this: Bit-thereum

I agree on most of your points. Thanks to share your thoughts, this idea is fresh for me, so there is things I need to iron out.

Such "Open Business" would not be legal, in current legal system, this is specially why I propose a way to bypass the legal system so Investor can still ensure themselves they are not cheated or limit risks if they are.
Without justice recourse and in a trust less system, the best thing we can do for investor is to put economical boundaries and incentives that make Founder acts rightly.
This is why I say "let's make in economically profitable for the wrong people to do the right thing". (inspired by Milton Friedman that replaced economically by politically )

My guess is that such business will never be legal as long as there is no incentives for the state to do so.
The only way to give incentive to the state to legalize that is to spread Open Businesses, then, most of them will want to pay taxes, but they will be prevented to do so.
At which point the government will move to make it legal, so entrepreneurs can pay their taxes.
I don't think there is another way to make it legal. This sounds like not politically correct to do so... but I don't see any incentive for the state to legalize that through another way.

So for now, lets suppose such system is not legal, as you rightfully said :

Are serious investors going to invest in a company without legal standing?
Yes, they would and here is why.
Such investement are completely open world wide. Initially, investors will not trust the Founder, as you said, so, I expect them to buy very few CC.
The amount of CC invested per investor will reflect their trust.
But remember, such CC are distributed worldwide without regulation, for as small as 1 satoshi (or whatever minimum txout).
Moreover, the incentive to earn money in real time for each sell is strong, there will be not so much time after which they will see if they can break even or not.
The small investment per investors in the early stages of the business will make a failure hardly noticeable for the investor, but will quickly break even if it works.

How can the company own property if its not recognized as a legal entity?
Legally speaking, for now, the property (what I call ProductLine) would be officially owned by the Founder.
This is an important point you make.
It means that such Open Business can only works for business whose value depends more on the network of contacts/providers and knowledge assets, than physical assets.
The increase in physical asset would give incentive to the Founder to fraud.

However, I talked about some measure Investors can take to limit the power of the Founder in "Risk Mitigation".
When Investor starts to think that it is dangerous to accept another funding round to the business because it will give bad incentives to the founder, he can requires him some measure of protection.
Investor can require Founder to transform CCKey and PaymentKey to a 2-2 wallet, whose other key would be held by a third, trusted party.
And also, to invest himself in its the CC of the company, a sort of "proof of stake".
Such trusted party can be chosen by lazy consensus vote of investors, and based on its "public CV of other open business" of the trusted party.

If you hit it big and Google wants to buy you for $1 billion dollars, but then your realize that the company doesn't really exists, then there's nothing for Google to buy.
Yes, this is true, but I think the if the Open Business have a reliable proof of profitability, which is open to all to see thanks to the block chain and published PaymentKey, then other investors will be more confident to invest more.
Don't forget that a CC is not a simple share. It is a right for direct benefit from sells.
If the business is profitable, former investors already broke even, and are likely to accept any expansion to increase sells, and prevent dilution.
There would not be "1 billion" Google investing in such business. But a multitude of anonymous "1 million" ones, worldwide.

As I said, the invested amount of BTC per investor directly reflect the trust in the open business, which in turn, depends on past, public performance.

What do you think ?

Nicolas, I've been following your work and I think you are doing good things.  I agree that colored coins is the best choice for the share certificates, and you've come up with some useful ideas.  

However, perhaps you are trying to take too big a leap with your proposal.  The issue that I see is that for a company to be taken seriously, it needs to be recognized as a legal entity in Common Law and Civil Law jurisdictions.  As far as I can tell, this means that subscribers must file a Memorandum of Association with a recognized authority.  The memorandum sets out the name of the company, and the authorized share capital, together with the subscribers (who become the first directors and shareholders of the company).  So I'm not sure it would be possible for the founders to remain anonymous if the company was to be recognized by our present legal systems as legally distinct from the individuals who started it.

I know a lot of people here would say "to hell with the status quo," but I believe such thinking would be problematic:

  - Are serious investors going to invest in a company without legal standing?

  - How can the company own property if its not recognized as a legal entity?

  - If you hit it big and Google wants to buy you for $1 billion dollars, but then everyone learns that the company doesn't really exists, then there's nothing for Google to buy.  


I actually just started a thread on the topic here of what the absolute minimum filing requirements would be for a company to form in such a way that it is recognized as a separate legal entity.  I still think we can use colored coins, cryptography, blockchain voting, no fiat bank account, etc., but at least for the next decade or so, we'll still have a few legal hoops to jump through...

 

I don't know about it, what does it offer compared to Colored Coins.
The use of Colored Coins is integrated to bitcoin, so physically, and funding round (as described in the document), is nothing but a transaction that get funds from 1-2 wallets, to a the CC issuer key, in exchange of CC coins. It is an atomic operation from Bitcoin point of view.

im thinking ethereum could be used in a p2p business

I was thinking about how a business founder and an investor can build a business without any trust relationship.
In such way that any coercion of the founder would not impact business's customer and investor, and where any fraud of the Founder would be economically damaging for the himself.
It leverages Colored Coins as the funding mechanism, as well as various Bitcoin mechanisms.

An "Open Business" is any system that :

    Allow Founder and Investor to stay anonymous,
    Protect Investor and Customer from any coercion of Founder
    Give Founder incentive to develop the business,
    Give Investor incentive to invest into business,
    Investor and Founder don't need to trust each other,


I published a wiki page talking about a proposal solution :
https://github.com/NicolasDorier/Open-Business/blob/master/specification.mediawiki

I am a developer, and thinking about building a tool that would permit operations of such Open Business easily possible.
I'd like you feedback.
The goals is "to make in economically profitable for the wrong founder to do the right thing", for such Open Business, because of anonymity of Founder, no legal way would help Investors.