 everyone is MJ. And in this video, we're going to be looking at organizations and their need for blockchain. So this is going to be part one of a series of videos. But what I want to do in this one is focus on decentralizing functions, because I think an organization can be seen as carrying out a set of functions. Now, a subset of these functions are done internally, and a subset of these functions are outsourced. Now functions can be outsourced to other organizations or to the community. And when a function has been outsourced to the community, it can be considered as being decentralized. So for example, Bitcoin outsourced this transaction validation to the community. And if we will look to the payments of these functions, we'll see that when an organization carries out a set of functions, it will sometimes get paid for creating functions. So a subset of these functions generate revenue. But then they also have to pay for a set of functions to be carried out. So we can say a subset of these functions incur and expense. Now how are these functions paid for internal functions are paid for indirectly. This is through employees and equipment are paid for and then they carry out the function. Or when we outsource to another organization, they're paid for directly. But when they're outsourced to the community, what happens here is they don't necessarily have to be paid for with cash, but with a token. And the token payment isn't an expense to the organization. So think of Bitcoin, they paid the transaction validators with a token. Now if we were to look at the cost of an organization, we'll see that a profit focused organization will seek to maximize this revenue and minimize its expenses. Now by rewarding community participation in carrying out a function with a token, it will reduce the total expense for the organization. However, there will be an expectation from the community that the token can be redeemed for perks. And some of these perks might be the revenue generating function that an organization also charges for. So future revenue might decrease. But if expenses are expected to reduce by more than the revenue reduction, then the integration of a token will have a positive impact on profits. Let's consider the Bitcoin use case. They outsource transaction validation to the community. So they rewarded the community with tokens. And these tokens can then be redeemed for perks. With Bitcoin, the perk was being able to transact on the Bitcoin network. So if we were to look at the Bitcoin business model, they have no cash expense because functions are outsourced and paid for with tokens. But they also have no cash revenue because functions can be accessed and enjoyed with the token. Yet what did happen was the creation of a new asset, which at the time of recording is over $500 billion. This is the total market cap of the token. Now, if we will take this and analyze our own organizations, we'll see that an organization needs to decide on which expense incurring functions can be decentralized and which revenue generating functions can be redeemed as a perk. So an analysis is needed to be done. You know, maybe your high expense incurring functions, can we reward community with tokens to do them? And our low revenue generating functions, can we allow the community to redeem with tokens? So for example, high expense, this is marketing design research, low or no revenue. And when I'm being my no revenue, think of decision making and voting and those kind of things. So let me give a very generic example, logo design. So what we have here is how Pepsi's logo has changed throughout the years. And we will see that Pepsi paid $1 million to update their logo. And experts are suggesting that logos should be updated every five years. Now, what if the following happened? If a subset of the community members submitted logo designs, and another subset of the community members voted on their favorite designs, then we could have something where one token equals one vote. And members receive tokens from QR codes after purchasing Pepsi cans, maybe you get one token per can that you drink. Then members use these tokens to vote. And in this case, the tokens can actually be sent to the designers. So the voters are spending their tokens to get the perk of power able to influence an important decision. Now all designers are going to receive tokens based on the number of votes. Some are going to receive thousands. Some are going to just receive a few. But all of these tokens can then be redeemed for a can of Pepsi. Let's say maybe 10 tokens equals one Pepsi. Or you can maybe even trade them on an exchange. Now your top designer receives the most tokens and their logo design is chosen. Now what's happening here is Pepsi's avoiding the $1 million expense. And what we could even see is sales could increase as members seek to acquire more tokens, because this token is also a little bit like a loyalty reward system. And what we're going to see is we're going to get more customer engagement. That's going to increase as they're going to be deciding on what the logo should be and all these kind of things. And also because the majority of the community is voting or they're deciding on, you know, what's the most popular logo, we're reducing the risk that the logo gets rejected. How many times have organizations released a new logo and the community is like, what on earth is that? So this is a very generic example where almost all organizations tend to go through the logo design process. But decentralization and specifically using tokens to fund functions can go into more specific cases. So for example, insurance. Now insurance is an interesting one when it comes to the whole crypto web three space because if we were to look at the three pillars of finance, this is investing, lending, and insurance, we will see that decentralized finance known as DeFi is very good at investing. That's kind of like the primary primary use case. They're putting in a lot of effort at the moment to try understand and do lending. They've got over collateralized lending. Now they're trying to do under collateralized lending, but that's another video or in on its own, but a lot of attention is being spent on lending, but almost non existent at the insurance level. There are a few protocols that are trying to be set up, but it's not nearly anywhere as close as the other two pillars of finance. But if we were to break away from this concept of decentralized finance and just maybe dilute it a little bit to semi decentralized finance, then what we can see that when you have an insurance company, yes, it's still critical that some of the functions are centralized, but I believe that we can decentralize some of the other functions and we might even get a return to mutuals, which is what we had before a lot of these insurance companies became private profit seeking companies and we could return to something where it's policy owned. So I don't want to get into too much detail in this video, but if we were to look at just the claim process, this is where your policy holder submits the claim and then money is paid from the insurer to the policy holder. We will see that there are three types of fraud that are present. There's policy holder fraud submitting a fake claim. There's the insurer fraud not paying a legitimate claim, but then there's also internal fraud of the employees abusing the claim payment process for their own personal gain. And I believe decentralization can reduce fraud in all three of these instances in the claim process, especially because we are getting new technology like nightfall, which is made by Polygon and Ernest and Young, which brings privacy to the blockchain with zero knowledge proofs. But like I said, we'll go into more detail in another video because I know not everybody here is very interested in insurance. But I mean, there's so much we can talk about. I also want to make another video focused on charities and how we can decentralize some of the donations. So subscribe if this kind of stuff interests you. But I guess in conclusion, what we've seen is that Bitcoin has successfully shown that a decentralized organization is possible. And I believe all future organizations will become semi decentralized. So I still think that some functions will stay centralized, they're just more efficient that way. But what I think is that completely decentralized, let's say, a completely decentralized insurance organization is going to be very, very difficult to achieve. However, a semi decentralized insurance organization, I believe will even be more efficient than the ones that are completely centralized. But with all organizations, there is this opportunity to reward community members with tokens for participation in an expense incurring function and to allow tokens to be redeemed for perks. And even right now, the most common is the vote. It's the perk of power, the ability or that good feeling you get when you influence a very important decision. But what these things are going to see is we're going to be seeing a reduction in our expenses. Some cases, we're not even going to be reducing revenue, and we're going to be increasing community engagement. So it's kind of like a win, win, win. And there's even the other win, which I haven't spent too much time on this video, which is how these tokens can actually get very, very impressive market caps. And this is a huge financial bonus. But yeah, tokenomics, that's maybe also a discussion for another video, what really makes a token valuable. And you can talk about supply and demand, but this is where it gets a little bit crazy is in some cases, by increasing the supply, you can actually increase the value of a token. But like I said, they may not get too distracted. We'll maybe talk about that in another video, but it's very, very interesting looking at the economics behind these tools. So if you want to contact me, so let's say you're just an individual eager to learn more, then I highly recommend subscribing to the channel or following me on Twitter. The name is MJ actually dot E for my tag, it's my middle name and my year of birth, Bayman 1991. But if you do represent an organization, then please feel free to email me at Michael J at polygon dot technology, where we can set up a zoom call to discuss next steps. On this channel here, what I want to do is make the following videos. Like I said, I want to talk about decentralizing donations. So looking at charities and NFTs, also want to go into blocking fraud with blockchain, decentralizing the claim process, just going into a little bit of the nitty gritty. So for all the activities out there, fascinated by operational risk, this is a must for you. Then also maybe a little bit futuristic why governance tokens will replace traditional shares in the long run. And then also want to get into a few practical videos, you know, how to actually set up your own decentralized organization, how to actually use blockchain. And it's fairly easy. It's not completely easy, but it's a lot easier now than it was a couple of years ago. Like I said, we'll also talk about tokenomics, what determines a token's value. And let's make more. So recommend videos for me to do in the comment section below. I also tend to write these things before I make videos on them. So if you want to get it hot off the press, make sure you check me out on MJ, the fellow Actree on Medium. But I'll provide links to Medium, Twitter and all these other things in the description below. As always, thanks for watching and I will see you soon. Cheers.