Networked Investing

Networked Globe

If you’re interested in networked investing, make sure you sign up for early access to SwiftDaos at SwiftDao.com

Friendships Make Good Investors.

Elite investors are often viewed through a heroic lens. Whether its Warren Buffet’s 5 can a day habit  or the latest multibillionaire’s escapades, we (and our mass media) tend to ignore the networks that inform and educate these elite investors in favor of their personal idiosyncrasies. The investing elite themselves frequently and repeatedly emphasize the importance of personal networks towards their own personal success. Jim Rohn, Idaho farmer turned wealthy investor, invented the saying “You are the sum of the 5 people closest to you.” That’s not someone blowing hot air; it’s backed by hard scientific evidence. An 80 year study by Harvard showed that your personal network determines not only your financial success but also your health in old age, marriage stability, and mental health.

Your ability to make excellent investment decisions depends on your personal network. The types of people that you talk to daily greatly affect your own thought processes. When you invest in a SwiftDao, you get all these advantages. You work as part of an active community to decide what is the most efficient way to allocate your capital. In the past, traditional investment clubs were able to fill this niche to an extent. However, investment clubs had limited reach due to their complex decision making process. With the SwiftDao standard, those barriers are removed and it is now possible for large communities to share advice, opinions, and educational materials with each other in pursuit of a clear mission.

Blockchain Empowers Social Investing.

That’s why SwiftDaos are structured around building and maintaining social relationships. Most blockchain investment products, like Melon, focus on the asset management capabilities of blockchain. What they miss is the problem plaguing the off-chain investment club community: coordinating large groups of people to make collective decisions. Blockchain allows organizations to create a fixed set of automatically enforced rules for governing social behavior. Traditionally these have been done with books such as Robert’s Rules of Order. These large and complex rule systems are necessary for traditional organizations because large groups of humans struggle to cooperate effectively. With blockchain technology, it’s possible to use much simpler sets of rules that integrate into familiar social platforms such as Discord. In SwiftDaos, moderators for social forums are elected by the community. These moderators can adopt whatever system of rules they wish for their forums. If the community disagrees with their decision, they have immediate recourse by simply voting in a different moderator.

Social investing has a long and successful history in the format of investment clubs. The founders of the first major investment club, now NAIC, quickly found that the conversations and connections that arose through meeting to discuss investments created huge amounts of value and allowed the organization to make far better decisions than traditional methodologies. All while democratizing information in a way that hedge funds and mutual funds fail to do. Today, BetterInvesting offers a huge resource of online information for investing in stocks. With SwiftDaos, much more can be done than just investing in securities. SwiftDaos can act as private equity firms, venture capital funds, or even start their own ventures. The unifying factor for all of these is the need to raise capital, a social forum for discussion, and a formalized method for finalizing managerial decisions.

Tron Army

Charismatic Centralization Damages Companies.

But why is blockchain needed for social investing? The collapse of WeWork shows the dangers of entrusting an organization to a single charismatic figure. WeWork’s ex-CEO is an incredibly dynamic figure who overcame the barriers preventing individuals from working together through a powerful vision. In the end, he abused the trust others placed in him to enrich himself at the expense of investors and employees. Imagine if instead WeWork was run in a more normal manner, with an active board keeping the executive suite in check. Investors and employees would not have been scammed, but there would have been little ability on the part of WeWork to present a vision and raise funds. SwiftDaos solve both problems by creating a powerful system of cooperation while placing responsibility in the hands of a community instead of any one individual.

Most innovative companies have formed around a single charismatic individual, and for good reason. Charisma allows individuals to overpower the coordination problems that normally happen when trying to implement a powerful vision of the future. But these individuals often create their own problems and are frequently ousted as companies grow, replaced with more level-headed managers with an independent board of directors. SwiftDaos promise a future of coordination benefits without the costs of centralization. Tightly organized groups can create and implement an innovative vision if mechanisms exist to prevent the group from taking high risk, high payoff steps.

Crowds Are Wise When They Are Informed.

Most of the blockchain community is familiar with the book “The Wisdom Of Crowds: Why The Many Are Smarter Than The Few”. James Surowiecki’s research showed that groups are frequently able to make better decisions than individuals. He found five main criteria to be necessary: diversity of opinion, independent thought, decentralization, aggregation mechanisms, and trust in the group.

However, James Surowiecki overlooked the importance of discussions by educated subgroups within crowds. Recent research has shown that subdividing crowds into smaller groups can result in even better decision making than for crowds as a whole. Published in 2018, Aggregated knowledge from a small number of debates outperforms the wisdom of large crowds conclusively demonstrated that debates within small groups, when the results from said groups are combined into a larger consensus, outperform crowds where no such debates occur. In the case of SwiftDaos, this research is implemented through providing exclusive social channels for investors who own a high enough percentage of the SwiftDao. This allows the most dedicated, informed, and interested members to have high level discussions transparently but without interference from the larger group.

Ghost In The Shell Raid

Networked Investing Will Outcompete Traditional Organizations.

Because of the nature of human groups and decision making, networked investing will ultimately outcompete traditional organizations on a large enough timescale. Research and empirical evidence has repeatedly and consistently showed that networks with properly adjusted rulesets can outperform centralized hierarchies. Even traditional organizations have been making the shift to flatter organizations over the last several decades.

SwiftDaos will accelerate the dominance of decentralized networks over hierarchies. SwiftDao standards are not only designed on the best academic research and corporate governance practices, they also leverage flexible yet enforceable rules on the blockchain to enable cooperation and coordination in ways that were simply not possible before. While in the past, charismatic leaders were required to organize startups to build the products of the future, SwiftDaos have the ability to transform the energy of a small dedicated group into an amazing product while sidestepping the risks, problems, and disadvantages centralized organizations have traditionally had.

If you haven’t already, you must sign up at SwiftDao.com to join the networked investing revolution. SwiftDaos empower investors and founders to build new startups, create private equity ventures, or even invest in traditional securities. However, we cannot do it without your input and help. Research has shown that for new standards like SwiftDaos to succeed require a massive amount of input from dedicated individuals like yourself who are willing to take the time to share your thoughts. Join the community and help build the future.