A Design of Economic Mechanism for Business Development Based on Blockchain

The innovative creation of cryptocurrency and Blockchain technology brings possibility for operating business in a decentralized community with reduced friction. But current business development on the blockchain platform is dragged by slow progress in technique, ill-designed economic mechanism, and difficult fund-raising procedure. Based on the analysis about major defects of Bitcoin's economic mechanism and the typical fund-raising methods in this field, we proposed a value-backed economic mechanism which has a clear separation of tokens' attributes as well as a reasonable distribution rule of profit. Rather than issuing a token with both utility and financing attributes at the very beginning, a utility token with a warrant attribute is introduced to stimulate and facilitate the value exchange between miners and other participants. After the business has become mature enough, token holders can redeem certain security tokens and start to enjoy dividends and other rights as a shareholder. In this way, speculation and fraud risks can be dramatically reduced, benefiting both project developers and investors.