Building the crypto economy
The world is undergoing a rapid shift right now. Blockchain technology is re-inventing the way we transact, interact and share information between us. New services are developing that are based solely on the blockchain. This in due course will give rise to what we are currently calling the “Crypto Economy”.
The term “Crypto” is in relation to the security provided by a blockchain — in that transactions (the term here is used broadly to mean any interaction between parties) on the blockchain are not able to be interfered from those outside the transaction. The trust and security is an inherent part of the system — which in itself has a multitude of benefits.
Perhaps the most relevant of these beneficial characteristics in driving the crypto economy is that with the trust regulated by the system, there is no need for intermediaries. In the traditional economy, these intermediaries are organisations who sit at the centre of the interaction between those who produce the good or service and those who consume them.
Money in a crypto economy
For example, a bank is a financial intermediary. It provides many services, but one of the key ones is facilitating and regulating monetary payments. When you pay for a chocolate bar in a shop with your credit card, the transaction information is sent to your bank, who deduct some amount from your account, send the money to the shop’s bank account and alert the shop that this has been done and you can walk away with your tasty chocolate.
With a crypto based currency, such as bitcoin, the scenario looks very different. The shop assistant tells you how much the price is in bitcoin, you send bitcoin directly from your wallet to the shop’s wallet. And that’s all. No need for a bank to prove this transfer happened, as it all visible on the distributed ledger of the blockchain.
Therefore the crypto economy will be one without intermediaries. For individuals such as photographers, the potential is great, as they’ll be able to better market and sell their services at at terms defined by them and directly to the prospective buyer. And they’ll also be able to take home almost all of the proceeds.
In a blockchain photostock environment, Photochain.io for example, a photographer will be able to list their works directly onto the platform, at prices of their own choosing. The buyers will be able to browse the platform and if they see something they like, then they can directly interact with the seller and purchase the work. No need for large corporations controlling the industry.
Micro-economies will also prosper. These are economies that are unique to a particular niche service in the real world. For example, SolarCoin aims to be a cryptocurrency that is generated as homeowners use solar panels to produce energy. Energy producers are incentivised by the prospect of receiving more tokens, as these will have a monetary value. Then when the weather is bad, they can use these tokens to buy excess energy shared by others who are part of this micro-economy and the system can be self-sustainable.
Another example of using blockchain to incentivise and reward good behaviour is Numerai. This is a cryptocurrency that aims to take on money itself, and replace it with a currency that rewards users produce useful and helpful contributions to society and be rewarded for it with more tokens.
Won’t things get too complicated?
With so many tokens, the question arises of complexity and why would you want so many cryptocurrencies? Why not just have one that works everywhere? Well this is more an issue of network security, transaction speeds and simply optimising of each specific use of a token. Crypto tokens will be easily interchangeable, as blockchains become interoperable (meaning they can interact with each other).
A crypto economy would be supported by large scale blockchains, such as the Ethereum blockchain and its ability as a turing complete system. This ability means it is completely programmable, and users are able to produce services that sit on its system. We are currently discovering the first stage of what this can lead to, in the form of Dapps, but the next iteration, Decentralised Autonomous Organisations are now on the horizon. And there surely will be more generations after that.
A blockchain that will cause significant change in the way we use the internet is the InterPlanetary File System. This decentralised web will not be owned by anyone or controllable or censored by anyone. It is also permanent in the sense that data cannot be tampered with once someone has uploaded something, thus making security concerns much less valid.
With data secured and hashed into blockchain networks, services that require copyright issues to be controlled, such as photography, can proliferate. Copyright claims are easy to settle as each photo has only one unique identifier linking it to the original photographer, which is not-removable and can be tracked across the network.
Some of the more interesting aspects of a crypto economy could involve having blockchain based governance. Not just of organisations, but potentially of governments themselves. Imagine a future where each debate in government is in the form of a vote. And each resident of that country has a right to vote in that decision through a blockchain based system. Costs and other concerns such as vote tampering are a non-issue with blockchain, so you’d expect to see a fairer system of governance, where individuals have a bigger say.
Plenty of re-invention ahead
We must remember that blockchain is still a very recent technology — only 10 years old. However it is already apparent that it has more transformational power than even the Internet. The Internet changed the way we communicate and interact, ushering in a new era of economy. With blockchain we’re looking to re-create a new economy again, but with the changes going much further and deeper than ever before, the crypto economy.
