Changing Entrepreneurship and Decentralized Investing

We looked at decentralized structures and tried to explain why they are important. In summary, centralized structures suffer from security inconveniences because they are managed from a single center. Single-center structures easily become a target for internal and external threats. However, decentralized systems are like mercury in the palm of the hand, where are you going to attack? These features make decentralized structures more robust.

Decentralized finance and fintech: From developing countries perspective

Of course, the differences between the two structures are not limited to this. These new structures also change the behavior of all players in their ecosystem. For example, entrepreneurs and investors… With the emergence of systems established with a decentralized structure, we are actually going through a big change in terms of entrepreneurship and investment. These terms in the classical sense we know are changing radically. How Does? Let’s explain

Entrepreneurship and Investing in the classical sense

Sir, normally entrepreneurship (done for profit) works roughly like this: A group of friends get together (or one person, it doesn’t matter). They come up with an idea. Then they begin to ponder over this idea. They develop the idea and start to create added value through this idea.

At some point, they need the contributions of outsiders to create more added value. For example, growing the team (so they create more business), traveling from city to city (so they find new customers), and renting an office (so they can keep the team together and work efficiently) while feeding themselves and the team. In the event that the income from the idea is not yet sufficient to cover these costs, they try to get financing from investors to cover the costs for a while (if they do not have the assets to borrow from the bank).

Decentralized Financial System: Egalitarian, equal system with access for everyone everywhere

Investors first examine what the entrepreneurs have done so far, then look at what they have planned and if they believe that they can get a considerable return for the money they will give in the future, they give money to the investors. In return, they receive a portion of the company they founded.

First of all, let’s understand that everything we have explained so far is a closed system. The idea is in the minds of entrepreneurs. Entrepreneurs establish a company to bring this idea to life and first own the entire company. Then they share it with investors. They protect the intellectual initiatives they create when they work on the concept and further with patents and similar mechanisms so that others cannot imitate them. At the center of all this added value is one structure – entrepreneurs, their companies, and their investors. When the company reaches a certain size, they offer its investments to the public (English IPO – Initial Public Offering).

This has happened in many initiatives we see today, especially in all centralized companies that have been established on the Internet since the early 90s, which we call Web 2.0. Facebook came out as Mark Zuckerberg’s idea, and Mark still has the sole decision-making power over all of the company’s decision-making mechanisms. Google was founded by Sergey Brin and Larry Page, and Amazon was founded by Jeff Bezos and is still managed by them.

Entrepreneurship and Investing with its new meaning

However, with the new decentralized entities that come with Web 3.0, this structure changes completely! Because the system established here is not a company but an ecosystem… and there are not only entrepreneurs and investors in this ecosystem. There are many other components. There are entrepreneurs, of course, but they are the ones who set up the event; The organism then grows on its own. What does that mean? Let’s open a little more.

Future of Insurtech: DeFi and Web3?

We mentioned that the new trend that emerged in the 2000s was born as a reaction to this wave of centralism. Therefore, the new structures emerging from this movement emerged as adopting the basic philosophy of this movement, which we call Web 3.0. One of the main points of that philosophy is breaking monopolies; information, control, in short, power are not gathered in one hand.

For this, as we mentioned before, they bring a structure in which control is dispersed all over the system rather than in a single center, and in order to achieve this, they eliminate the need for trust in the person with an encrypted mechanism.

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In the classical sense, the entrepreneur and the investor-owned all of the added value (which can be measured by the company value) when a venture was successful. And maybe some employees, thanks to the stock options given, that’s all. Now, in line with the philosophy we mentioned above, external developers who contribute to the development of the idea, independent external resources that help the system work, and even end users also get a share of this added value. In other words, the sharing of the profit and the power is now more democratic.

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