How to develop virtual ecosystems

Distributed LabBlogHow to develop virtual ecosystems

For the last month and a half, I’ve been giving a lot of thoughts to such notion as the economy of tokens—something which could be used to develop virtual ecosystems. Some people would say that the theory of user inducement for prompting business growth is already well-established, while others claim that the notion of tokens is practically a revolution in apps and that the every ‘future business’ will issue its own independent currency.

It seems that there are still more questions than answers. I’ve compiled a substantial list of questions, and I’ll shortly be publishing my ideas on this topic, but meanwhile, I’d like to share my thoughts on what you SHOULDN’T do.

In the previous post, I discussed the idea that a token should represent some kind of a limited resource (for example, a place in the bathroom queue in an overcrowded club). Of course, if the resource isn’t limited it only creates more difficulties for users. However, if the resource has been limited artificially, the business model is doomed to failure as well. So, let’s go back to our example with the bathroom queue. There are many startups that work as follows (we’re currently considering bathroom as a service, but it actually doesn’t matter what service is provided, the main point remains the same): they don’t charge for the entry but instead conduct an auction for the places in the queue to the bathroom which has only three cubicles. That said, they have no plans to increase the facility, allegedly because this would reduce the demand for the service, correspondingly the price of the tokens. Obviously, that’s not how business works. Well, it only works in case of a monopoly, which can hardly be called business:)

To give another example, a start-up sets up a network for providing calculation services for neural networks at mining farms—a very popular topic nowadays. They introduce an ‘innovative’ payment method for these services via their own tokens (the amount of which is limited). It’s obvious that if the code is open-source, nothing is really stopping some competitors from cloning the network and offering the same services for less. This would, of course, reduce the demand for tokens of the original network. This kind of situations are extremely beneficial for the community in general but are hardly fair for the particular service-providing network.

Pavel Kravchenko
About the author

Founder & cryptographer