Very Personal Futures

People are just waking up to the fact that the same cryptographic game theory and technology involved in creating and securing the digital scarcity and ownership immutability that make cryptocurrencies, NFTs (non-fungible tokens) of digital goods and services (from gifs and articles to tracks and tweets) valuable and tradable, can also be used to mint and trade coins – or “shares” in your future self (or at least your earning capacity), to willing investors hungry for yield, to fund your own present.

These equity alternative instruments to personal debt obligations turn people (and their future earning potential) into tradable financial instruments. These “personal shares” can include human capital contracts and income sharing agreements, such as those offered by the likes of Lambda School, that allow college graduates to study for free in exchange for agreeing to give the college a share of their future earnings after graduation; or individual entrepreneurs selling stakes in their personal future earnings by issuing personal cryptocurrency tokens in much the same way as a startup would sell shares in the equity of a business venture. In this way, individual, natural persons are able to gain access to the same sorts of financial instruments formerly reserved for business entities and other non-natural legal persons. 

Examples of individuals who have done just this, effectively selling themselves to investors, include the artist and entrepreneur Coin_artist who “turned herself into an NFT” and the 23-year-old Alex Masmej who tokenised himself and raised $20,000 on the Ethereum blockchain, selling the rights to control his life to strangers.

This thinking opens a whole new dimension of financial access and opportunity for the young and ambitious who have previously lacked access to finance to fund their dreams and aspirations due to a lack of credit history or collateral that precluded them from obtaining loans from the formal financial market.

But what could go wrong?

After all, lifetime consumption smoothing makes a lot of sense to economists (and humans alike). 

There is little point in starving and struggling when you are young and healthy just so that you can live in luxury when you are too old to enjoy the finer things in life. This is why people take on debt, to buy a house, or invest in an eduction that could increase their future earning capacity when they are young – so that they can enjoy the fruits of their future earning capacity (which will hopefully be substantially higher than their minimum wage student income) today, and in this way enjoy a reasonable quality of life throughout their lives. 

And surely selling personal equity is better than taking on crippling student debt or an overextended montage bond? 

However, viewed in another light sellers of personal tokens could essentially end up paying rent on their own life to an investor who effectively owns their labour and time. 

This is why before you jump into personal tokenisation and rush to persuade investors to give you cash in exchange for being a part of your future ideas you need to consider both side of the proverbial coin.

On the one hand, personal equity could be a viable alternative to expensive, crippling student debt and an important source of financial inclusion and empowerment for people who have been excluded from financial markets.

On the other hand, it could just as well be viewed as a form of “neo-serfdom”, or “digital indentured labour” which exploits desperate, financially excluded or naive people and traps them into a Faustian bargain over their futures.

However, like many of these emerging, largely unregulated decentralised economy innovations however this plays out, it is sure to change and challenge the financial industry – and our ethics.

This article was first published in Brainstorm magazine.

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