For Erik Norland, bitcoin is a type of equity that’s new to investors.
As Wall Street comes to grips with the cryptocurrency craze, investors are asking a question that has riven the industry since its formation—is bitcoin a currency or a commodity?
But for Erik Norland, senior economist at CME Group CME, -0.03% which introduced its version of a bitcoin futures contract last Sunday, the cryptocurrency can be also understood as a rare form of equity—one so rare that investors have never seen it before.
He described crypto assets as “the first equity ever launched by a non-hierarchical ‘teal’ organization, a self-driving entity with an independent force and purpose, its role in promoting blockchain and the potential consequences of bitcoin and blockchain for the economy.”
Sure, bitcoin doesn’t have a board of directors or reams of earnings statements for analysts to pore over, but it should be rather seen as a corporate organization “whose value derives from the size and health of that community.” Norland borrows the term from sociologist Frederic Laloux, who described a “teal” organization as one that was non-hierarchical much like Wikipedia. That’s in contrast to, say, “red” organizations like tribal chiefdoms and the mafia, “amber” organizations like bureaucracies, or “orange” organizations, like most traditional corporations.
The community surrounding bitcoin give their efforts, time and computing power to the cryptocurrency’s expansion. Though like Wikipedia it draws on the voluntary donations of its adopters, “bitcoin, by contrast, rewards contributors economically in a manner somewhat analogous to [most corporations] but with much stricter, and less political, rules for who gets paid what and why,” said Norland.
To mine the cryptocurrency, a person has to devote their computers to vetting transactions between buyers and sellers through the bitcoin blockchain. The more computers and electricity a contributor could dedicate to mining operations, the more bitcoin they could make.
This is “analogous to stock grants made to employees by corporations. The stock of a company can be seen as an internal currency used to compensate and motivate employees, aligning their interests with those of the organization,” Norland said.