Value Communities — Blockchain beyond transaction processing
We’ve been talking with smart thought leaders in the blockchain space both online and in meatspace this past several weeks about the ImmersiveOS project and the top question we’ve been hearing about the project goes something like this:
What does it mean to have a mixed reality world powered by blockchain tech? Do you really need blockchain tech for your platform core uses cases?
Our answer to that is a strong yes. We believe that blockchain is the best emerging technology today for creating a global community of value. In such a community, all the different stake-holders, in our case — users, creators, platform operator, 3rd party publishers, local businesses and brands benefit from low-cost and seamless exchanges of value between them that goes beyond mere transaction processing. The prevailing narrow view of blockchain tech today is that it is an infrastructure transaction processing technology. We have a broader view — in our view, blockchain technology is disruptive because it enables the creation and operation of value communities where transaction processing is only part of the story.
A value community is a group of stake-holders with different goals, desires, and interests that can only be satisfied by exchanges of value in a non zero-sum like situation. Useful value communities are rarely a zero-sum game due to network effects. They become exponentially more useful, valuable and powerful with linear usage growth. Blockchain technology is the core technology to enable the creation of such communities. The main difference between social networks and value networks is that in value networks more than just social capital and attention is exchanged on the network — in the case of Immersive, when supported by blockchain tech — virtual goods, location-based property rights, and services are created and exchanged between the different stake-holders and with each such exchange the value of the virtual economy grows. In other words, blockchain tech and crypto tokens enable the creation of virtual economies of a group of people with shared interests, and low-cost trustless transactions is just one technical feature of such economies. There are other important aspects — among them — free exchange of value between users, automatic proof of ownership of all things of value so they can’t be arbitrarily taken away by the platform operator, low transaction fees for micro-payments, open participation on a global basis regardless of users fiat currency, and most importantly, bootstrapping of an economy with its own currency by a group of people with shared interests and vision (In ImmersiveOS case — people who share an interest to create and participate in mixed reality activities). On a more concrete level, blockchain tech enables new value use-cases that are not possible today on social networks without users buying into the platform operators own wallet.
The big idea behind blockchain tech is the creation of an ‘Internet of Value’ — but what does this really mean? For us, it means providing the enabling tech for value exchange use cases that enable the creation of value communities and this is exactly what we are trying to build with Immersive — A value community for mixed reality.
To better articulate this vision we have put together a diagram with some emojis (oh my!) that shows how a value community can be created and operated by having a crypto currency and a blockchain core that provides the solution for all the value exchange use-cases for each main stake-holder:
The main question folks have about this is:
can you implement these core use cases today without blockchain tech?
The answer is quite simply no.
You may employ a web2-era payment tech to implement some but not all of these use cases in a somewhat clunky and limited way that is dependent pretty much on the whims of the platform operator, but even if you do so you are not going to really be creating a value community. One of the main issues is that without a crypto currency the stake-holders do not benefit from their contribution to the economy they help establish by adopting the platform. The growth in the platform’s value goes solely to the platform operator. In a value community, the growth in value is shared between all the stake-holders which include the platform operator, and blockchain technology enables this in a fundamental and disruptive way. In other words, blockchain tech is an enabling technology for an online community where the platform developer and operator is just one stake holder in the network.
Imagine yourself being a product designer who is tasked with building the product and tech to implement the uses cases in the slide above. You will need to build your own proprietary token to enable value exchanges, allow stake holders to somehow buy it with fiat currency with web2.0 credit card processing services and manage all transactions and value transfers yourself using proprietary code. What now? Stake holders are now at the mercy of your arbitrary token — you completely control its exchange rate (via your credit card processing service), you need your token secure it from online fraud and you don’t have a real mechanism to benefit your platform early adopters from being there for you from day one.
If blockchain grand vision is an Internet of value then the only way for it to become a reality is through the creation of online value communities powered by blockchain tech, where it is used to implement new class of value related use cases beyond just being an in-place replacement component for PayPal or Apple Pay.
Smart people in the blockchain space such as FredEhrsam (coinbase co-founder) gets it. See: VR is a Killer App for Blockchains and more entrepreneurs and thinkers will as they start looking more into blockchain tech and its disruptive potential.
The role of a platform operator in the creation of a value community is the establishment of the basic value exchange rules and supply and framework for stake holders to exchange value on the platform but once these rules are in place — blockchain tech and smart contracts can ensure that he is not able change these governing rules at whim based on selfish considerations that not benefit the larger community, and that all stake holders will always be able to freely exchange value between themselves without any restriction and benefit from the platform’s growth. It is already part of the emerging blockchain myth and lore, that Vitalik’s initial inspiration for Ethereum and decentralized smart contracts was a beloved virtual world entity that suddenly had power taken from it by the platform’s operator.