For the last month-and-a-half I’ve been giving a lot of thought to the notion of an economy of tokens — something which could be used to develop virtual ecosystems. Some people would say that the theory of inducements for users to prompt business growth is already well-established – while others claim that tokens are practically a revolution in apps, and that in the future every business will issue its own independent currency.
It seems there are still more questions than answers — but even deciding that the right questions are is still a thorny problem. I’ve compiled a substantial list of questions, and I’ll shortly be publishing my ideas on this topic — but meanwhile today I’d like to share my thoughts on what you SHOULDN’T do.
In a previous post I discussed the idea that a token should represent some kind of limited resource (for — a place in the bathroom queue in an overcrowded club). Of course, if the resource isn’t limited, this just throws difficulties in front of users. However, if the resource has been limited in some kind of artificial way, the business model is also doomed to failure. So let’s go back to our model of the bathroom. There are many start-ups who don’t charge for entry – but instead begin an auction for places in the queue for a bathroom which only has three cubicles — while simultaneously having no plans to increase their facilities (as this would reduce demand, and thus the price of tokens!).
For example — a start-up sets up a network providing calculation services for neural networks at mining farms — a very popular topic nowadays. They introduce an ‘innovative’ payment method for these services (using their own tokens, of which there is a limited supply). It’s obvious that if all the code is open-access, there’s nothing stopping a competitor from cloning the network exactly, and offering the same services for less. This, of course, would reduce demand for tokens on the original network. A side-effect of this kind of situation is that forks in service-providing networks are extremely beneficial for the community overall — but aren’t always fair for forks in cryptocurrencies.