Karmacoin as a Business - Introduction

Karmacoin is an awesome alternative crypto currency that is set up to change the way we look at them. Rather than expecting random adoption to take place in order to give the coins value, Karmacoin is built around a community that works together to help push value to them. In a world where more and more coins are popping up daily that have no real purpose (other than to pump and dump for profit), setting one apart from the rest is important. This is what Karmacoin is set up perfectly to do.

Bringing Real Value

Most coins that go for adoption are just hoping that different stores will start using them, so that people will buy the coins in order to trade for their favorite items and services. While this works a little, and it does create some liquidity, there is one large issue: most people do not see the benefit in going through all of the work to learn about and purchase crypto currencies just so that they can trade them in for what they want. They could skip that process and go straight to buying what they want instead, so why spend all of that extra time and effort? The idea is that this will change over time, but the fact is that coins need to also focus on what things are like right now, working to make them a viable option in the short term; not just sitting around waiting and hoping that things fall as we want them to (which may happen or it may not; we simply do not know).

Karmacoin has its own structure that revolves around creating new businesses that utilize Karmacoin. It has its very own company, and allows volunteers to help create, shape and take part in the different businesses to help bring in income. This income helps by boosting the Karmacoin economy (which helps give it more value and liquidity), and the income is also shared with the investors through profit sharing. Let us take a look at this part now.

Investors, Profit Sharing and the Company

Anyone and everyone is able to invest in Karmashares (which are a portion of the company) at any point. This can be done by trading in Karmacoins directly (which gives 1.75 shares per 1000 coins) or by holding a lot of coins for a specified period of time: 30 days (which gives 1 share per 1000 coins, so long as they are held). These shares represent a part of the company and the profits, relative to how many you have compared to everyone else. The great thing about it is that the coins can be held or traded in at any point in time, so you do not have to jump in early to take part; even weeks from now, all you have to do is get some Karmacoins by mining, earning or buying them, and then you become a shareholder as well. This is something that makes Karmacoin much different from other coins; it is the only one that puts you in partial control of a real business to earn money.

There are still some details that have not been shared with regards to how the profit sharing and everything is actually going to work (like votes on changes and such) with shareholders, but I will do a separate write up about this when there is more clarity. I do feel that it is pretty safe to say, though, that getting in earlier is better than later for those who want to see how it goes (being that if it is super successful, one can expect the price of coins to go up as a result, therefore increasing the cost of getting involved).

The coolest thing about the company is that you can gain Karmashares by just holding coins. There is no requirement to actually trade them in. If you are a trader, for example, you can buy a lot of coins (or, rather trade for a lot of them), and then just hold them in your wallet. When the dividends from the company come out, you will earn an amount proportional to how many Karmashares you own, compared to the whole. This is a major thing, because it means you can mix the liquidity of the coins with the ownership of a company. In contrast, with most companies you would have to sell your stock first, then withdraw your funds to use. This means you would likely not be able to get the true market value of your shares unless you were either patient (which could take weeks or months, and runs the risk of the prices going down), and instead would have to settle for less than they are worth by doing a quick dump. By holding Karmacoins, you are able to just trade off the coins to others or sell them, without having to deal with any of this.

Update 05/09/14

Karmacoin's LLC has officially been formed in the state of Wyoming. The company is now official! There is currently some talk going on as to how to handle voting within the company, with a couple of different options:

  • Form a board in which they get to vote on big things. The board members would be chosen by the community and could be voted out of the board (and replaced) at any time with enough votes to do so
  • Run it as a democracy of some sort

I have put in my personal recommendation for this, which is to run it based on a democracy, but with the number of votes being based on how many Karmashares each person has. If someone owns half of the company, their vote should count for a lot more than someone who owns only a little bit (or none) of it. This does open the doors for someone to purchase a majority of the company and then use their vote to have absolute power over the voting process, but this is something that we deal with in every other company as well so I do not believe that it is a big deal.

The only real potential problem I see here is that not all of the Karmashares are going to be claimed. As a result, there is never going to be a true 100% of the company claimed, although it is owned. Being that the Karmashares page already accounts for this and has two numbers, one for the company ownership and one for the profit ownership, though, I do not believe that this is a real issue. Essentially the way I see it, the profit ownership would be what represents the voting power, rather than the actual company ownership. This helps keep everything in line with what Karmacoin is attempting to do, while at the same time letting everyone have a vote that is proportional to their holdings (which is the way it should be). I am hoping that this is the direction Karmacoin ends up taking. More information will be shared as it is known.


In future articles I will look at specific businesses that are planned that revolve around Karmacoin. There are some awesome things that people are coming up with, and I think they could really make the system work and have some true value that is derived from the inside, rather than hoping for adoption as a method of payment. Of course, it is also worth mentioning that while we hope the coin is successful, and it does bring a lot of new and exciting ideas to the table, there is simply no way to know what the future holds. As such, if you do decide to get involved, realize that it is still a risk. With that said, I do personally believe that it is a pretty good one!


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