Tokenize All the Things and What Happens Next?
I am standing in a small hall of hastily assembled booths all flaunting tokens of some description and function. Somewhere over the past months, what I thought of as a unified community forked into the blockchain-crowd (using the technology to replace or supplement existing technology) and the crypto-crowd who seek to create value, be that with speculation, or token-based ecosystems. This split in the community isn't inherently bad, it's a natural process as a community grows, but it happened somewhat swiftly and took a lot of the broader community by surprise.
As much as the blockchain-powered technology interests me more, this article isn't about explaining how these tokens work (pay a visit to your search engine of choice to find plenty), but more about what this increasing tokenization could mean for the future.
In the hall are tokens for investing in property, football fans, watching TV, and naturally, Porn. Granted a lot of these ideas are poorly planned or implemented, but every new scene and advancement needs a period of crazy expansion before hopefully weeding out the junk and settling into something more meaningful.
All these individual tokens taken in isolation, don't add up to much apart from a wide variety of ecosystems you need to invest time and effort into. If every publication, community, artist, and service you use breaks out into its own token-based walled garden, that isn't progress, it's inconvenience. But combine these token-based communities with decentralized exchanges, and everything becomes infinitely more interesting.
Think about what you learned in history about barter systems. If a farmer agreed with a baker that one chicken was worth 10 loaves of bread, then they made an exchange. Somewhere along the way, this process became more abstract, and we agreed that if increasingly centralized authorities said that a monetary token was worth a particular value, we exchanged goods for that.
The new token economy coupled with decentralized exchanges starts to reintroduce this old concept, but as is typical with new technology, at a speed and scale we've not seen before. Here's an example.
You're active in the Football fan token community and have ten tokens, and decide you want to have a more significant influence in the Flower growers token community, but you don't have enough tokens to participate. You visit a decentralized exchange and find someone who is looking to do the opposite and agree on an exchange of tokens guided by an oracle that informs you if the price agreed is a fair one.
Sounds simple enough so far right?
One of the criticisms of better-known cryptocurrencies has often been that you can't do much with them on a day-to-day basis. After a short couple of years where there were Bitcoin ATMs, and a handful of stores (online and bricks & mortar) that accepted them, adoption has decreased, and not increased. You can level the same criticism at the modern wave of tokens. Steamit for example claims to have paid out millions of dollars to content creators on their platform, which is admirable, but until it's easier and cheaper for a creator to take those tokens and pay for rent and food, it's a somewhat intellectual exercise.
Let's take the token concept further 5, 10, 15 years into a theoretical future. What if your landlord used a landlord token, and your supermarket a supermarket token? Via a decentralized exchange, you agreed that tokens you earned in other communities were worth something in those communities? Thanks to the different ways you earn these tokens such as proof-of-work, proof-of-participation, proof-of-stake, proof-of-brains, your varying activities start to produce matching value across ecosystems.
Jilles Van Gurp of inbot said to me at the same conference I mentioned at the beginning of this post that he saw this movement as the beginnings of a form of universal basic income. The value you add to the 'system of systems' gives you value throughout the system.
Mulling on this concept more, it starts to sound a little like our current monetary system. You make money by investments, work, or other means and take it elsewhere to pay for things that you need or desire, and so the system continues. The decentralized nature puts the decisions on value more into the hands of the participants than centralized authorities, but will it turn out any different in the long run, or are we just replacing one abstract barter system with another?
I'd love to hear your thoughts.