How can open-source projects have monetary value?
Before we talk about cryptocurrencies, let’s talk about the value of having open source projects. People that are used to investing in some sort of company expect a projected portion of revenues of something that is income generating.
When you bring food to the potluck, your food was free for everyone to participate.
Other people would never have the same opportunity to cook these recipes that you don’t ever try.
In an accounting sense, it has no value — it’s free! Right?
But you were able to convert your value of time and (in)ability to cook everything into a chance to share a wholesome meal and experience with other friends. Essentially, you recreating your family recipe is bringing some sort of knowledge, skillset, and expertise to the (literal) table, and allowing everyone to share in the bounties. When your friends ask you if you have plans, you can brag about how you get to sample all this great food. That’s some social value there, too.
You could invite your friend, because you want your friend to experience this, get some good food and meet some new friends. The more the merrier — somehow adding one person (assuming they don’t freeload) actually even bolsters the value of the entire group with another potential neat recipe and good conversation to be had.
The potluck is a turnstile — you enter with your time and love of cooking, and exit with a full meal, friends, and a good experience to boot. So long as people get a good experience while achieving their goal while going through the turnstile, they will be happy.
Turnstiles accumulate value for both the builders/organizers and the users. Users that own a share of participation in the system through token ownership hold access to someone else’s valuable good or service, and hold a valuable position in how to suggest new improvements, use cases, etc. The monthly pass transit rider gets to use as he/she pleases by buying in to the system. Those who don’t have a token to use the turnstile, will never see what’s on the other side. As the services provided become more valuable and important, the token value will increase as more people find the goods and services indispensable.
So what does this have to do with open-source projects?
Well, anything can be a turnstile, whether it’s a centralized, public good, a privatized platform, or an open-source project. You might know about a company called Facebook, or Alphabet, both of which make their main services: a search engine, a social network, a video website, to be totally free for users. Yet they’re worth billions without charging the everyday user a penny. How?
These platforms are incredible at getting great buy-in from users in the form of time spent. Whether it’s creating memes in groups, adding friends and building social graphs, or filming creative content, these platforms get people to do things they want to do with their time (message friends, showcase talents, find cool stuff), and let people pay with their attention. From there, they can figure out what they can do to cash out this attention span (be it ads, selling complementary products, etc.), talent/brain share, and time allocation. Just like the potluck, it gets people to contribute what they want into the system, to get what they want out of the system. Behavioral incentivization at its finest.
With open-source projects, the same thing can happen, to an even greater degree. With no centralized entity to take a cut of the profits, or to act as a middleman between transacting parties, more people have the value incentive to participate, with what amounts to a more efficient marketplace for whatever people want. Thus, even if a project is open-source and free to access by anyone, it can still act as a turnstile that captures value from those using it. In the classic cryptocurrency case, we have hundreds and thousands of developers. miners, economists, and other individuals devoting their valuable time to improving the underlying technology behind a specific network/protocol/system. Converting their distilled work power into stored value in a great system is nothing more than a clear system that rewards individuals for collaborating to build the best things possible (aka how work should be). This encourages for collaborative support in trying to bring the best minds together to improve what’s available for all people to use.
Take for example, Wikipedia, one of the largest sites in the history of the internet. Wikipedia has lasted longer than many tech companies, despite being run by a non-profit foundation. If you ask any student that has ever cited a Wikipedia article, there is certainly value in the knowledge Wikipedia provides, capturing the time value of all these contributors from around the world that add to the world’s knowledge base. There is zero doubt that Wikipedia has some sort of value, even if it’s not the traditional unicorn.
You might say, well, can’t someone copy the open-source code and call it their own? Well yes, and they can modify it however they wish, if they think that will help improve the technology. But what they can’t copy over is the amount of attention, care, energy, time, and effort captured by the original network. That’s not as easy as control-c, control-v. The network effect is strongly at play here, with the value of the work tied to the amount of support and future contributions it has from those around it, not just the underlying product itself.
You can copy Wikipedia today, call it Dogepedia, but if you don’t gather all the current contributors from Wikipedia to help update your site, too, then you will only be relevant for a short period before your information is outdated — meanwhile, Wikipedia still has people editing it daily.
At the end of the day, whatever you build that commands time, energy, and attention of the greatest amount of people will be the ones that leave a legacy on how the world is shaped. With an open mind, the next big things will be open source.
