Is there a token for that?
Soon, tokenized assets and functions will capture the popular imagination, and create a whole new economy.
The current level of technological advancement creates an unprecedented opportunity to revisit and extend the early ideas behind the World Wide Web (as pioneered by sir Tim Berners-Lee), such as decentralization (and the removal of third parties), non-discrimination (or network neutrality), bottom-up design (or permissionless, unrestricted innovation), universality, consensus (here, about the rules and standards). The promise of refreshing the early Web ideas started in 2008 by the seminal work of Satoshi Nakamoto by defining an electronic currency called Bitcoin, which was extended by Vitalik Buterin in 2014 as Ethereum, a platform for creating “coins” or crypto tokens representing value also beyond the financial realm. But ethereum introduced another intriguing notion: Automatically executing programs, or smart contracts, first introduced by Nick Szabo in 1994.
The concepts that underpin the new computing technology transcend different domains, and bring together experts from cryptography, economy, business, design, psychology but also sociology or philosophy. It is beneficial to have a good scrutiny of the automatic processes, which can have such a deep impact on the society as a whole. Because we are dealing with a technology supporting value in many of its aspects, analyzing the technology from a value perspective brings us to its semantics: The way, how we perceive the meaning of the crypto tokens. And tokens let themselves well to such analysis, because they are a special kind of signs representing objects and/or functions living in the underlying database (a distributed ledger, or the blockchain in our case), and can be generated by smart contracts.
Crypto tokens are the basic elements representing the function of the technology behind them, stand for the media, through which self-creating systems can evolve and develop. Niklas Luhmann, sociologist, defined different types of such self-organizing systems, which grow through elements they create. In these terms they resemble the blockchain tokens. Luhmann noticed such a feature, formerly known as autopoiesis from the living systems, also in law, economy, art, and politics. Bringing this concept forward, we can speak about the system of law (and about its justice token), economy (value token, coin, or currency), art (beauty token), politics (power token). We can extend this notion further to travel (experience token), education (knowledge token), work (time token), online security (safe token), insurance (accident token), advertising (attention token), cloud storage (storage tokens), cloud computing (computing tokens), prediction markets (future token), sales (commission token, which we are focusing on at Adahoy), etc.
Tokens are used as a media in decentralized applications (or dApps) to perform various jobs. The purpose, or pragmatics, of the tokens is well summarized in Fig. 1. According to William Mougayar there are tokens representing right, value exchange, toll, function, currency, and earnings. Even though tokens can have any number of the above features, choosing the main purpose of a token can help streamline the value proposition of the entire application. The more different tokens an upstart project has, the likely it is risking losing focus, but also not communicating the value to their customers well. Simplicity is key, especially when presenting the benefits of a complex technology, such as the blockchain.
All of this leads us to appreciate the potential of tokenization, i.e. the process of creating basic elements to represent and to track real-world assets (e.g. the origin of food or diamonds), virtual assets (e.g. reputation, music, or securities) or functions (e.g. accessing a specific application) alike. Tokens can thus fuel the use and development of well-designed application ecosystems based on the blockchain. Tokens are set to become a new commodity, increasing the user experience of current applications, but most importantly enabling use cases that we cannot even think of. In a similar vein, as Apple Inc. trademarked the phrase “There’s an app for that®”, Ethereum could very soon boast having “a coin for that” as well.
