Because the blockchain is a secure system that enables a trusted network it may be described as a value-exchange protocol. In this respect, it is often said that what the web did for the exchange of information the blockchain does for the exchange of value. Just as the web revolutionized the use and exchange of information within society disrupting whole industries based upon the centralization of information, so to the blockchain is set to do the same for the recording and exchange of all forms of quantifiable value.
Token Economics 23: Plug and Play Enterprise
THE PLUG-N-PLAY ENTERPRISE
A central concern of economics is the question of how do people work together within some form of enterprise and then redistribute the value created by that collective effort, in a way that is optimal for the entire organization.
An enterprise is a structured project or organization designed to achieve valued ends.
What defines a business, enterprise or company is a business model. For something to be considered a business there must be some coherent business model which defines how the organization creates value, exchanges it and generates revenue and thus achieve its objectives.
A business model can emerge wherever there is the opportunity to create, exchange and capture value. If we discover a new source of mineral under the around that people need, then we can build a business model on top of it by extracting it, exchanging it and capturing some revenue from that value stream.
This business model is realized through the construction of a business or enterprise. Enterprises then operate on top of some value stream, intercepting, transforming, exchanging and retaining value.
These enterprises enable the specialization and division of labor within economy and thus the production of complex products and services.
Previously we found that we have to typically be inside of one of these formal structured organizations to be able to be productive in this way. But the proliferation of connectivity and reduction of transaction costs taking place bring about a deep structure transformational in the economy from closed organization defined by their boundaries to open networks defined by their protocols. And this offers new ways to really unlock and harness the assets and creative potential of people around the world within new larger and more complex networked organizations.
PLATFORMS
With the rise of the internet has come a new way for structuring the division of labor within the economy through on-demand, networks or what have come to be called platforms.
Platforms are information networks that enable two-sided markets, for producers and consumer to connects and exchange value. These web platforms like Alibaba, Amazon, Google or Facebook have today already risen to the top of market capitalization within the space of just a decade or so to replace the corporations of industrial capitalism.
These platforms differ from the traditional organization as they are designed to be dynamic and event-driven. Where providers and consumers can couple or decouple from the network on-demand instead of having fixed roles, like Uber drivers, or Airbnb hosts.
They are modular, tasks and service provisioning are broken down into small modules that can be easily produced and consumed, like on-demand videos on YouTube or blog posts.
They are scalable, a seller on Alibaba can easily and rapidly go from a few hundred dollars in sales to a few million.
They are based around interactions and the exchange of value in real-time instead of fixed structures and procedures. Much of the platform’s operations are automated through software running on centralized servers.
The advent of blockchain technology will overtime extend these previous trends into the world of fully automated and autonomous networked platforms. On a more technical level, this will create a new architecture for our enterprises and entire economies. This new design paradigm is best captured in the term service-oriented architecture.
SOA
Service Oriented Architecture (SOA) is an approach to distributed systems architecture that employs:
- loosely coupled services
- standard interfaces
- and protocols
- to deliver seamless cross-platform integration
It is used to integrate widely divergent components by providing them with a common interface and set of protocols through which they can communicate within what is called a service bus.
Over the past few decades, service-oriented architecture has arisen as a new systems architecture paradigm within I.T. as a response to having to build software systems adapted to distributed and heterogeneous environments that the Internet has made more prevalent.
There are many definitions for SOA, but essentially it is an architectural approach to creating systems built from autonomous services that are aggregated through a network.
SOA supports the integration of various services through defined protocols and procedures to enable the construction of composite functions that draw from many different components to achieve their goals. It requires the unbundling of monolithic systems and the conversion of the individual components into services that are then made available to be reconfigured for different applications.
Over the course of the latter half of the 20th-century enterprises consolidated their IT infrastructure within Enterprise Resource Planning systems (ERP) behind firewalls.
Over the past decade or so those IT systems have started to migrate to the cloud, but now they will be moving increasingly to this distributed cloud of these next-generation blockchain networks.
As today’s enterprises face new challenges of having to collaborate across large networks, foster innovation within their organizations and as information technology is greatly accelerating the pace of change, reducing the barriers to entry, shorter and shorter product life cycles are the norm.
These enterprises have to respond to fast-changing environments by becoming more agile and the most advanced and forward-looking of these enterprises are already moving towards a platform model to achieve this.
EVENT-DRIVEN ENTERPRISE
The enterprise of tomorrow will unlikely be based on the static structures of today. But instead will be event-driven networks as we go from a push model of industrial production to the pull model of the services economy.
Service-oriented blockchain based networks will use advanced analytics to pull together resources when and where needed on demand.
The enterprise of tomorrow will be more like an ever-evolving swarm rather than a structured machine, with value being created in micro-interactions dynamically within networks of peers; some large, some small.
Enabling this rapid coupling and decoupling from blockchain networks – of people, resources, and technology – when and where needed will require plug-n-play, API like interfaces.
With the confluence of the services economy, blockchain, and analytics for the first time, we can actually identify what people are contributing to an enterprise, what economic value they are creating, and begin to reward people in real-time.
The enterprise will need to be inherently designed to be able to plug in any capacity to the network as required. The most successful of these networks will be those that are able to harness the efforts of the many, along multiple dimensions, in a frictionless automated fashion. When we start to combine these capabilities we start to see a new and very different architecture to the enterprise and economies.
Token Economics 22: Trust & Transparency
TRUST AND TRANSPARENCY
In a Facebook survey done in 2016 asking millennials if they trust banks, 92% of them said they do not trust banks.
In contrast to this, the blockchain is creating a new form of native digital trust that is significantly absent in existing institutions today.
This loss of trust in centralized institutions is one of the hallmarks of many post-industrial societies today. In a world of trusted centralized institutions, few would take interest in a distributed system that requires a paradigm shift in thinking.
These token economies are going to gain the trust that is lost from our existing institutions by being more transparent and the fact that they are auto-enforced by code.
Blockchains are a technology of transparency. Public ledger systems let us see all the interactions in the whole system – even if those interactions are anonymous – and this is very different to the world we live in today.
TRANSPARENCY
The closed nature and misalignment of interests within centralized institutions of today reduces their capacity for transparency.
Facebook does not tell you that they are making a profit out of you, with your data and the advertisements they deliver to you because there is a subtle misalignment of interests there and they don’t want that to be transparent. Likewise, their algorithms are black boxes, they don’t want others to know about them.
Centralized systems create many boundaries that block the flow of information across the whole network and increase its overall opacity.
Gavin Wood a co-founder of Ethereum describes well the kind of economy that we have created with centralization when he says, “the world is much like a set of walled gardens, within the garden you’re free to play, you are taken in if you accept the authority of the household that actually owns the garden. But it’s very difficult to get between the gardens in reality. This boils down to banks and various financial institutions making it very difficult and timely reconciling transactions that go between them. But the more important thing is that as individuals and small business owners it’s very difficult for us to interact with each other if we don’t yet know or trust each other. Instead we have to go to these guardians of society, these intermediaries, these trusted authorities the middlemen in order to interact.”
When you remove the centralized component in these networks you also remove the wall around them that they create, which can work to greatly increase transparency across whole networks. By switching to a peer-to-peer model, you switch to a model based upon direct feedback loops between peers. To get that dynamic real-time information feedback loop you need transparency. The information has to actually flow directly instead of being mediated.
By aligning the interests of the network, you can make transparency possible as people have less of their misaligned incentives to hide from each other. When things are on the blockchain then everyone can go and audit what has happened. This is like finding bugs in open source software where “many eyes make all bugs shallow.”
Part of the problem with centralized systems is that they are vulnerable to a rich get richer lock-in effect.
The issue with the centralized model is that large organizations get capital easier, greater liquidity and they get to dictate terms because they are seen to be more efficient and stable. This makes it more difficult for new startups to compete.
When the Internet started it was built on open protocols like email or TCP/IP and everyone was able to create. It was easy to discover websites. That’s not true in the internet anymore.
Closed networks like Facebook or Twitter are gated communities that use their user data to gain an advantage.
If you are a startup they also have the potential to shut you down as soon as you compete with them or violate their terms of service.
Once a centralized organization of this kind has grown it is very easy for them to become extractive, because it is difficult for people to change providers. Any system that becomes extractive will not want you to know that it is such and this will again reduce transparency in the system.
FRACTURED SYSTEM
One of the major challenges faced by organizations today is rapidly escalating complexity within almost all domains.
As our environments become more complex bureaucratic organizations have responded to that by creating more subsystems – more specialized departments and domains – the result being that things have been broken up into these different silos.
These silos provide the organization with some of the specialized capabilities for it to respond to the increased complexity within its environment. But at the same time have the effect of locking information about what’s going on inside because they don’t want to share that information; because they’re afraid competitors or customers will take advantage.
The more complicated things get the more we basically break things up and the more fractured and siloed the system becomes.
The greater the resistance to the overall flow of information within the system and the greater the overall opacity.
Blockchain networks enable us to collaborate within large networks, connecting horizontally and replace proprietary technology with open source protocols, greatly increasing transparency on the network.
This transparency can be used to reduce risk and uncertainty and thus reduce costs. With the blockchain – because everything is digitally native – we can have the actual information about transactions within the network. And we can, for example, lend against that with minimal risk.
If there is a smart contract that an organization pays you every month then you can use that to get a loan against it with minimal risk and thus minimal cost.
Also because these may be smart contracts you could just adjust those contract so that the capital is automatically routed to the lender as payback. Also no one can run away with the money because it is controlled by the network which reduces risk again.
Likewise the network could control for bad actors routing the finance around them.
OUTCOMES ECONOMY
Just as the underlying technology is based upon a proof-of-work or proof-of-stake system, so to a true services economy that the blockchain enables should be based on outcomes delivered. Unlike selling products which are all about the promise of a functional system, services can be measured according to the actual functionality delivered; the work delivered instead of simply being given a product that may or may not function well. The proliferation of sensing and big data analytics will enable us to measure and quantify our economies in unimaginable ways and in so doing begin to track the actual functionality delivered, which is at the end of the day what people really want, or are increasingly wanting as the so-called “burden of ownership” of the industrial age product-based system starts to take hold within consumer societies.
An “outcomes” system of this kind is again just one more way that a blockchain based economy could work to better match the information layer of token exchange with the underlying flows of real value.
Token Economics 11: Extrinsic & Intrinsic Value
INTRINSIC AND EXTRINSIC TOKENS
With major technological, social and economic processes of change underway we are fast moving away from the well-established model of the Industrial Age and into a new form of digital networked economy, where the traditional well defined parameters of economics are being once again revisited as we search for a new model better suited to this new reality.
One aspect to this is a reconceptualization of the very foundations of economics, that is to say, the idea of value. With token economies, we are really re-exploring what value is and how we quantify and exchange it.
Part of this equation is the differentiation between intrinsic and extrinsic value.
The economic system that evolved over the course of the modern era has come to be based on utility as a measure of extrinsic value.
Token economics is a more generic form of economic model that lets us define not just utility but also intrinsic value. To make sense of this we need to first look at what we mean by utility and intrinsic value.
Things can have value both in and for themselves and as means to other ends. For example, a tree has some kind of value in and for its role within an ecosystem. But it also has value in use as firewood for heating.
The first form of value we can call intrinsic value and the second extrinsic value or utility. It is important to make this distinction because the two have very different properties. For example, most of us recognize that having many friends and connections has a certain value. But we also recognize that this is different from financial capital. Buying friends is not the same thing as having friends. Why is this so?
Because money is a measurement of utility while friendship and social bonds are seen to have some form of intrinsic value.
Though our traditional monetary system does not capture this form of social capital in some way token systems can. For example, likes on social media can be a form of tokens, with those tokens representing your social capital.
This subtle difference between intrinsic and extrinsic value and how we may harness and capture them through tokens is very complex and something we are just beginning to explore.
INTRINSIC AND EXTRINSIC VALUE
Our traditional financial system and the basis of neoliberal free market economics is the construct of value as utility.
Utility is the value that something gives to some person. Utility implies that it has a general and immediate usefulness that people would be prepared to pay for.
Utility is a measure of extrinsic value.
Utility is instrumental, like a tool or an instrument, we just use it for what it can achieve, we don’t care about the system itself.
Utility is always relative to what someone is prepared to pay for it.
Due to this we can measure the value of something by looking at its supply and demand curve to derive a single price, that is defined as the measure of its value.
In contrast to utility is intrinsic value. Intrinsic value is the value that something contributes to the maintenance and functionality of a whole system.
With intrinsic value, we have a unit that values the functionality of the whole network.
For example, the social capital contained in the bonds of a society that enables it to function as a community is a form of intrinsic value.
A mangrove swamp that preserves a local ecosystem and prevents coastal erosion is a form of intrinsic value. When we chop the mangrove down that may deliver something we can exchange on a market and utility, but it has lost its intrinsic value in maintaining the functional integrity of that ecosystem.
Utility is a measure of some derivative value, while intrinsic value is inherent to the network or system that delivers the value. For example we are able to quantify, buy and sell wood but not the functionality of an ecosystem.
We are able to buy care for elderly people but we are not able to buy with money a functioning community that might provide this service organically.
Intrinsic value is like a fixed asset, it is non-liquid. You can cash in the value of an ecosystem or of a community or culture, as we have done in many ways, but you lose a massive amount of the value when you do that. For example, research has shown that a mangrove swamp is worth orders of magnitude more when it is left intact than when it is cashed in.
As a metaphor, we can think of utility as the lowest denominator, being divisible into many things and easily exchanged.
Whereas intrinsic value is the highest denominator being non-divisible and non-exchangeable. Because it is intrinsic, it is inherent to the system and can’t be easily ported to other contexts.
TOKEN SYSTEMS
Traditional currencies and the free market system only let us quantify and exchange utility, they do not account for the value that may be inherent to a system that is not of immediate utility to any actor. But token systems enable us to expand economic activity beyond the realm of utility.
Token economies can be understood as a natural evolution to our economic system that responds to the broader set of values that people come to hold in post-industrial economies.
The industrial age was all about the provisioning of basic tangible products, which the market system and utility captured effectively.
A post-industrial economy – which all advanced economies are today – goes beyond this basic provisioning of goods as people’s basic needs are met they move up the hierarchy of needs and start to care about and value a broader spectrum of services.
The traditional model of utility tells us about the exchange and consumption of goods. It does not tell us about the quality of the social, cultural or natural environment within which agents exist. Thus actors can end up living in a severely degraded social, cultural and natural environment – which significantly reduces their quality of life. While still, the economy is churning through vast amounts of resources so as to make up for this, and our metric of utility – in this case, GDP – would still tell us that the system is in an optimal state.
The economy is supported by a vast heritage of natural capital – such as clean water, sunlight, oxygen etc – which stays providing the conditions for the inflow of natural Resources.
Whereas in the previous industrial age these may have seen infinite, today it is becoming more apparent that they are finite and we are increasingly looking for means to quantify and integrate them into market decisions.
Likewise, an economy is embedded within, and dependent upon, a massive nexus of social and cultural institutions that are required for it to function effectively. This value that is in social bonds that enables trust and frictionless exchange is called social capital and the economy benefits all day, every day, from huge complex networks of social capital that go unaccounted for. But again we are starting to take note of the value of social and cultural capital as important to the success of enterprises and economies.
Increasingly, what people in advanced economies want from their economies is not just GDP but quality of life, which is a much more complex thing involving many different forms of value. This is why a post-industrial economy is a services economy and the best model for a services economy is a token model. Because token networks can potentially capture and incorporate all the different forms of social, cultural, natural and financial capital needed to provide quality of life.
PROGRAMMABLE TOKENS
By excluding intrinsic value we have created the notorious divide within the industrial economy between the market and the public sector.
Markets were previously limited to utility exchanges and dependent upon public institutions to regulate the supporting social and natural capital. However, this is what changes with token economies as we can now begin to quantify, account for and exchange social and natural capital.
Going forward we will be increasingly able to express social values through tokens via their programmability. Because tokens are digital they may be programmed with certain rules and when you have moved assets on to the blockchain, those programmable rules can be used to define what kinds of activities the token network supports or does not support.
For example, if our society decided tomorrow that we no longer thought the eating of meat was a good thing and wanted to move away from it, we could do that by simply no longer purchasing meat products and the entire industry would disappear quickly.
In a digital token economy, we can put our money where our mouth is, as a proof of what we value. We could create a veggie token, that could be programmed so that it could not be used to purchase meat products. Or as another example, we may have a weapons-free token, which is programmed so that it can not be used to purchase weapons. If our societies only had tokens of this kind then weapons could not be purchased and they would disappear.
We could then see how much our society value peace by looking at how closely that token traded relative to another token that was the same but could be used to purchase weapons.
If there was a big difference and the token traded at a very low price then our society obviously doesn’t want the token and is not willing to lock itself into a weapons-free world.
We can see how this integrates social values with economic value in new ways and helps us escape from a world where people and politicians say one thing and do another. In many ways, it reflects the underlying blockchain proof of work or proof of stake system.
The way that we prove that we value something is by locking ourselves into it. The way that we express our social values through an economic token is by locking ourselves into networks that express those values.
This multi-value token system enables us to recognize and mobilize existing networks in new ways. Tokens help us to expand the economic system to incorporate more value systems and thus harness people’s motivation along more dimensions, rather than simply for utility-based profit.
Tokens, because they are more generic enable us to quantify almost any form of value, both extrinsic and intrinsic.
When you hold a currency to an asset you are making an investment in that network, by are saying that it has value to you. If no one wanted to hold Dollars then the Dollar would have no value. By creating all these little economies with their own distinct currencies we are able to say exactly what it is we value and invest our resources in that ecosystem.
By holding the Liverpool pound or the Bristol pound we are saying that we value that ecosystem and will invest our resources in it. When we cash our Liverpool pound in for a British pound we are saying that we don’t really value it; we are not prepared to restrict ourselves to making purchases only in that network and support the community value that it creates.
This is why it is important to not think of tokens as being like traditional currencies because they represent the possibility for a new kind of information services economy that is fundamentally different from the one we know and is a necessary evolution in our economic structures. Just a significant as the evolution from a pre-modern feudal system to a modern industrial economy.
Likewise, it illustrates the issues we are having surrounding regulation. A token economy is a different form of economy to the industrial economy. It will not fit inside the box of the industrial model.
Because token economies expand the nature of markets to include a broader spectrum of values they can be self-regulating, which stands in contrast to our existing industrial age logic of the utility based market, which always requires external regulation and support because of their incompleteness and narrow set of values that they incorporate.
The token economy offers the possibility of creating self-sustaining economies by incorporating all relevant value systems within multi-value tokens and multi-value markets.
While in the industrial economy all forms of value could be reduced to a single metric of utility. A services economy is inherently a multi-value economy.
While extrinsic value may be reduced to a single metric, intrinsic value is many inherent forms of value each requiring their own distinct token that is irreducible.
To really understand the significance of token economies is to appreciate that society and economies evolve and change over time and part of what is happening in the world today is an evolution in what people value and that is a very profound thing that in turn really requires a new economic model to capture and develop.
Michel Bauwens of the P2P Foundation describes this well when he says “The three revolutions in human productivity: so the first invention is coercive labor that gave us civilisation, slavery, serfdom. That’s how we created castles and temples. In other words the motivation there is external negative motivation: I conquered you, I could kill you, but out of the goodness of my heart I let you live and you can work for me for the rest of your life. This is the social contract of slavery. I think capitalism introduces something new which is, well it’s not just about that, but also about self-interest. In other words positive extrinsic motivation: I’m doing something because I’m going to get something for it, which really give a boost to human science and technology, etc. I think we’re going through a third revolution now, which is about actually moving from extrinsic to intrinsic. So we are building systems — open contributory systems — like Wikipedia and others where people are actually there for variety of motivations but they are mostly intrinsic motivation: I want to create a global internet encyclopedia, I want to create this, I want to learn from it, there are various motivations.”
Token economies is a new way for us to try and represent intrinsic motives. It enables us to create economies that better reflect both peoples’ intrinsic and extrinsic motives, but that relationship between intrinsic and extrinsic motives is extremely complex and subtle. Figuring out exactly how that works is a long learning process ahead.
Token Economics 5: Token Service Networks
The blockchain is a new modality for organizing society and economy, as such it is often referred to as an institutional technology.
Professor Jason Potts talks about this as such, “this isn’t a story about how the economy grows because of this new technology, it’s a story about how we can now create new economies in ways that we could never create new economies. It used to be that you have to have a government and a nation-state and a money system and laws and legislation and all of these things, and you know there’s 193 economies in the world or however many nations there are. We’re about to enter a world where the number of economies in the world will change hourly, it may well be measured in the billions not the small hundreds and these things will be largely built on technologies like the blockchain. I think once you see that it’s a governance technology, an institutional technological revolution, that’s the interesting thing that I think has largely been missed.”
What is different about this institutional technology is that it is distributed by design, that means that unlike centralized systems that work to improve closed organizations, it instead improves opens systems of organization. This is a paradigm shift in that it runs very much contrary to the centralizing forces prevalent in the industrial age; it is something that we are not used to and that is why it is difficult for us to understand.
Blockchain networks are inherently designed for coordinating open systems, their innate distributed design is in fact inherently resistant to closure. Though private blockchains may deliver short-term efficiency gains for existing centralized organizations, the fact is that private blockchains remove most of the valuable benefits of using a distributed system and as soon as someone figures out how to develop a public blockchain for the same purpose it will harness more resources to grow faster and eventually replace it.
As Toni Lane Casserly, Co-Founder of Cointelegraph states it, “if you’re going to create a blockchain project, if you’re not creating a public utility you are fundamentally not creating a blockchain and you’re fundamentally not creating a new form, a new economic asset in a new series of token classes, because the entire point of blockchain technology is that we are creating new forms of economy as an open-source public utility.”
Blockchains are distributed systems with extreme network effects. They are designed to push outwards, the more people and organizations they bring into common systems of coordination the stronger they are. They are designed to network the intra-organizational space, greatly facilitating coordination within large ecosystems, across whole industries and economies. This is how they really create value and this is how they are going to disrupt existing systems.
Existing organizations won’t be disrupted by one of their competitors, they will be disrupted by protocols that network across whole industries to build ecosystems that are greater than the sum of any of their parts – just as Amazon, Uber, and YouTube did in the past, but this time these networks will be larger, distributed and increasingly automated.
Indeed the long-term vision of these token networks is as the infrastructure for a new form of global services economy. We think we know what globalization is about, we think we know what the services economy is, but the blockchain as an IT infrastructure is set to realize the convergence of these in new, unexpected and powerful ways.
In the past decades, we have wrapped layers of communication networks around our planet.
We first started communicating and exchanging media along this new infrastructure as social media went global, forming networks composed of hundreds of millions of people. We then started to build service applications on top of this shared IT infrastructure; services like car sharing, accommodation, and e-commerce, but that services layer is still quite fractured and very much dependent upon traditional centralized structures.
Blockchain provides this global communication network with the protocols to exchange units of value securely and with limited friction.
As the protocols mature and the blockchain becomes this globally distributed cloud computer that it promises to be, it will become extremely easy to build secure automated services on top of it that amass micropayments in a frictionless fashion. Those services will be borderless as they are running on a global distributed computer. Likewise, they will not be limited to just the traditional offerings of the private sector but will also now include public services.
For the first time in centuries, nation states will find that they are having to compete with global token markets when it comes to the provisioning of public services. It will be very difficult for individual organizations to compete with these global public utility networks that support whole ecosystems of users, particularly those that manage to align incentives in more productive ways and are able to harness the productive capacities of the many instead of the few along more dimensions.
Similar to the rise of Google and Facebook, these token networks will be very formidable actors in the global economy within less than just a decade.
Token Economics 1: Context
Economic forces are everywhere. They shape and structure our everyday lives. It’s how we organize people, resources, and technology to create and exchange value within society.
During the modern era those forces came to be channeled and structured within a particular set of centralized bureaucratic institutions based around the nation-state and the enterprise.
But today the proliferation of information networks is unleashing constrained economic forces.
Through ledgers and blockchain technology, the most fundamental rules governing our society are now open for redefinition, as was prior to the industrial age.
As advanced economies move out of industrial production and into a new form of global services and information economy, the economic model of the industrial age is becoming eroded.
This emerging global information and services economy will be coordinated through the internet running on an updated set of protocols that provides the secure distributed infrastructure for this emerging global token economy.
This transition builds upon major trends that began in the late 20th century which are today converging in powerful new ways. Privatization and globalization, financialization and the rise of online platforms are all converging as blockchain networks merge economics and information technology to take us into a new economic paradigm.
- Privatization opened up more spheres of activity to markets.
- Globalization expanded those market around the world.
- Financialization connected up our real economy into an integrated information-based financial system.
- The platform economy created new forms of user-generated networks.
Blockchain brings these trends together in synergistic, powerful new ways.
Hence, a new economic system is being established; one that is truly global, that reflects the underlying logic of services. This will be an economic model that is for the first time in harmony with its underlying technology of information.
These emerging token networks offer the potential to unleash a massive wave of creativity and innovation.
With trillions of dollars set to migrate to this global cloud computing and blockchain infrastructure in the coming decades, the stakes are high.
Financial and economic sovereignty appear to be slipping out of the fingers of nation states.
And the tensions are mounting.
Are we moving into a lawless chaos? Or are we moving to a historically new level of economic organization?
That will be decided by our capacity to understand this new economic paradigm coupled with our ability to design and develop new token networks of synergistic incentives.
Rethinking how we organize economic production and exchange is one of the major challenges and opportunities. Token economics is an opportunity to revisit the foundations of economic organization.
It’s an opportunity to reconstruct a new form of economy that is different from the industrial model that we know so well.
It’s an exercise that is of critical importance to the development of a sustainable model to economic development in the age of information, globalization and billions of people wishing to join a worldwide economic system, which is already showing major signs of stress.
This is no longer about politics, policies or protesting, the technology is reaching a maturity. We now stand at a point where we can design economic systems from the ground up. The success or failure of such systems does not rest with the actors in the network, but squarely with the design of the system.
Possibly for the first time ever, if we don’t like the prevailing economic system, we now have the option to design a better one.
What is so powerful about this revolution is that it is not really driven by idealism or politics but rather economic incentives. The global economy will switch to being based upon distributed blockchain networks with each actor seeing it as in their economic interest to do so.
This revolution does not require large-scale political coordination. It bypasses it. Instead, it employs a highly modular and granular transition.
Specific parts of the existing economic institutions can be upgraded and integrated into a new economic model.
Yet, this will be a profoundly disruptive transformation.
Enterprises will be automated. Whole industries will be upended by powerful new blockchain ecosystems. National governments will face mounting pressures from a global information services architecture.
This new economic paradigm promises the potential to build new forms of economic organization to deliver what people value.
It promises a more open and inclusive model that harnesses the efforts of the many instead of the few.