F E R D O N

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Lokahi Public Blockchain

Blockchain holds hope for solving not just one but several of the worlds problems. Blockchain adds authenticity in a world of fake news and phony facebook pages. In the future, company size will no longer be the currency of trust and those born into a disadvantaged situation will be able to conduct business across the world at eye level with even the wealthiest consumers.
Ferdon believes creating a smart contract or digital agreement is a right not a privilege. Our tools will be made available at no cost to those who are using blockchain to bring about a more fair and ethical world.

It Started With A Vision For a Better World...

At the outset blockchain’s most talked about feature was its’ ability to remove the cost of activities that support the delivery and payment of a service or product - but don’t directly participate in the creation or exchange of said products or services (i.e. those that don’t add any value in the process). Therefore removing a previously accepted middleman or ‘necessary evil’ that weighs down nearly every transaction with dead weight.
The removal of non-essential costs adds value back into the economy and can provide a ‘sea change’ in economic opportunity. This is essentially an egalitarian idea because the less well off you are the fewer trust factors surround you. For people on the lower strata of society in rich countries and people living in poorer countries, the dead weight added by various middleman parties can be more than 90% of the value of the entire transaction.
Removing dead weight via blockchain benefits the entire economy and adds incentives for people to innovate and find new ways to thrive.

...Then Something Went Terribly Wrong

In an ironic twist, despite blockchain having an indisputably profound effect on the way people think of the future of financial markets, supply chain management and healthcare to name just a few industries, the process of starting a business on the blockchain became rife with inequalities and middleman taxations. The epitome of irony.
The largest members of industry segments where blockchain was winding up a powerful storm of creative destruction, suddenly became the custodians of the future of blockchain and the big deals of Fortune 500 companies -- and not decentralization -- became the new measuring rods for the growth of blockchain. The great equalizer effect of blockchain was priced out of reach of those that needed it the most.

We Overlooked Something Very Basic

One very important point seems to have been missed, it's not the blockchain that empowers people, it's the smart contract (or digital agreement) running on the blockchain that empowers people. When the cost of building a smart contract is high, the creator of the smart contract holds leverage over its users and can extract a tax from its users. More importantly, the impetus for innovation no longer comes from those trying to remove the yolk of middleman taxation but from the profit motive of the professional entrepreneur. Blockchain cannot be transformative until we democratize the smart contract, which we prefer to reference more broadly as a digital agreement at times.

The Way Forward

The transformative technology of the blockchain revolution was not matched by a like innovation on the business side. To date, smart contracts have been manufactured much the same as appliances or cars.

Lets compare the current business model with a hypothetical business model driven by an organic need:

Business Model I - The current business model

  • 1. Once capital requirements are met, a company hires required experts who spend months designing what they think customers will want.
  • 2. After they design and build the product
  • 3. An optimal price is determined and the product is marketed to potential customers.

Business Model II - A model that is a much better fit for blockchain

  • 1. Producers and consumers realize there is a middleman tax on each transaction that is taking money out of both their pockets.
  • 2. They decide to eliminate this middleman tax by moving to blockchain.
  • 3. One party creates a smart contract which divides up the middleman tax between producer and consumers so they both benefit.

Think about this carefully and you can see Business Model II is drastically better then Business Model I

  • In Business Model II, The ICO (Initial Coin Offering) and STO (Security Token Offering), which have poisoned the cryptocurrency market -- goes away. In Business Model I the ICO and STO are used to raise capital to create a smart contract product to sell to users. In Business Model II, on the other hand, parties who are already participating in transactions are incentivised by cost savings, not new profits from selling smart contracts and don’t need capital
  • In Business Model I, a third party creates a financial instrument that is claimed to third party participants to have certain characteristics and behaviors. This makes it an obvious hazard for fraudulent behavior and the need for regulatory intervention is rather obvious. Now look at Business Model II, parties in a transaction agree among themselves on the logic of a smart contract. It is a private business transaction in which government regulation should not and typically does not intrude

Ethereum and Ferdon Are Building the Technology To Reboot The Blockchain Revolution

We described above how the high cost of building a smart contract leads to business models that commoditize the smart contract which in turn creates a producer-consumer relationship in the creation of a smart contract that requires regulation and capital investments usually through an ICO or STO. As already mentioned, this model nullifies the original objectives of blockchain by placing creative destructive powers of blockchain in the hand of those whose business models are not tenable in a post blockchain world. The proceeds of cost reductions are owned by the party who was originally applying a middleman tax to the transaction and, more often than not, used to pad profits

In order to move to a business model based upon profit redistribution two objectives must be met.

  • 1. The infrastructure of blockchain must be improved so that the blockchain can truly become the “worlds computer”
  • 2. The financial cost and requirements for specialized knowledge must be reduced drastically. We are talking like 1000 fold reductions in cost.
  • The first objective will be realized late first quarter 2019. Several projects, such as Ethereum's’ Casper, are set to make the cost of using “the worlds computer” drastically more cost effective. This will remove the cost of infrastructure and infrastructure management as one of the major headaches for the innovator. While it will likely always be cheaper to use a cloud environment the cost of overcoming the learning curve and deciphering pricing models of cloud services should not be overlooked.
  • The second objective is being worked on by Ferdon and our product Lokahi will be released late first quarter 2019. The Lokahi solution allows for Business Model II to become a reality, drastically reducing the cost of development of a smart contract while simultaneously removing the steep knowledge barrier from the process of constructing the smart contract.

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