…And Melt It Into the Community. Rinse, Repeat.
A decentralized system spreads control among many parties. It may or may not be tokenized. The key benefit of tokens is to align incentives among participants of the ecosystem. It’s a positive-sum game among the tribe of token holders. (And let’s not forget the windfall of a token launch, if you choose that path.)
So far, only startups have launched tokens. But what about enterprises? Could we tokenize Facebook? What about Amazon or IBM? How? What would be the benefit?
In short: tokens will eat the enterprise from within, because investors will make money and the community will gain. We’ll have crypto tribes that started as companies. Repeat across many enterprises and it means goodbye to the stock market. Finally, this turns out to be a new response to the Innovator’s Dilemma — how can enterprises compete given their tendency to protect their profits (aka the status quo)?
Let’s explore in more detail.
Here’s the recipe, for each enterprise:
- Tokenize. Shares become tokens.
- Decentralize. Spread power among more people; users get tokens for past and future contributions.
- Melt into the community. Over time, both value and power spreads further.
When one or a few enterprises do this, and actually make money for their shareholders in doing so, then other enterprises will follow suit. In the end, it’s all crypto tribes.
Let’s walk through this recipe, using Facebook as a example.
Step 0. Status quo
Facebook is at odds with its users. Facebook’s founders and shareholders have made massive amounts of money. Yet its users didn’t, despite contributing the key personal information and content that is the heart of Facebook. This is a basic tension: Facebook has a bias to openness, versus users’ privacy.
With its billions of users and high engagement, Facebook has become enormously powerful. Yet it’s controlled by a small handful of people. This is dangerous for society. Especially when it’s not structured to handle such a responsibility.
There have been various proposals to improve the situation. One idea is to get the courts to consider it a monopoly and break it up. This relies on slow-moving government processes.
Other ideas come from the blockchain world. Namely: overtake Facebook from the bottom-up, by building something decentralized, and try to get the users to come. We’ve seen many such efforts at decentralized social media. But success is limited so far. The greatest challenge is how to populate the network. It’s chicken-and-egg: people only join if their friends are there. It’s hard to crack two billion highly engaged users.
There’s a variant: build something decentralized and tokenized. This can only help, because early token holders = your first users, and they’re incentivized to bring in their friends. HODLers gonna promote. So, tokenization increases virality. But it’s still no guarantee to overtake a network with two billion engaged users.
These ideas assume a start at zero, and attacking from below with something faster, sleeker, more viral. And they might work; but I’ve come to realize there’s another way. Tokenize from within. Here’s how it works.
Source/More: Tokenize the Enterprise – The BigchainDB Blog