How a CryptoWork Platform Functions, in Practice
Some advice for digital marketplaces to build the next generation of work platforms
Further to my previous post on Can Blockchain and Cryptonetworks Unite a Fragmented Freelance Economy? people asked me how would a freelancers’ platform powered by the blockchain work in practice. This is, in other words, what I broadly call a CryptoWork Platform. My contention is that you can not understand a CryptoWork Platform or any blockchain platform if you don’t understand the crypto (or token) economics driving it.
Begin by looking at the far right corner of the diagram above, the one called Freelancers & Customers.
That is the original infrastructure of a traditional freelancers’ platform where users transact with one another and exchange value. Freelancers and their customers will buy (in cryptocurrencies) and consume a number of services available on top of the blockchain such as authentication, security and various decentralised applications. These services are meant to verify freelancers’ profiles, certify skills, guarantee payments, enhance trust among parties, etc.
The service providers on the blockchain are the Validators & Miners and App Providers (forked left end of the diagram).
Validators & Miners (top left of the diagram) provide trust and enforce the rules of the CryptoWork Platform, thus ensuring consensus in the governance process and the smooth running of the blockchain. By using computer power, they validate each freelancer/customer transaction, add new blocks to the chain and execute smart contracts. Validators & Miners are paid transaction fees in cryptocurrencies, from the parties making the transactions, i.e. Freelancers & Customers.
App Providers (bottom left of the diagram) create new decentralised applications (DAPPs), software and commercial services on top of the blockchain such as escrow solutions, reputation portability, etc that don’t require a middleman to function or to manage a user’s information. Similarly to Miners & Validators, App Providers are paid service fees in cryptocurrencies, from the parties making the transactions, i.e. Freelancers & Customers.
Crypto economics create a closed loop ecosystem where contributors (Validators & Miners and App Providers) and consumers (Freelancers & Customers) are incentivised to interact with one another and maintain the whole CryptoWork Platform. Contributors sell cryptocurrencies earned from providing their services to the Crypto Exchange (top of the diagram). Consumers buy cryptocurrencies from the Crypto Exchange to pay for transaction and services fees.
This virtuous ecosystem creates a powerful network effect where more and more consumers want to use the services of the network, which in turn scales the CryptoWork Platform, the value of the cryptocurrency itself and eventually, the general adoption of blockchain solutions.
In the next post I will explain how freelancers’ platform operators could set up and govern a CryptoWork Platform, balance decentralisation with a permissioned blockchain, provide employment benefits and rewards in cryptocurrencies.
Thanks for reading 🙌
N.B. Many thanks to Kimmo Karhu (D.Sc.), Postdoctoral Researcher at Aalto University for providing inspiration to the diagram and to Jaewoong Choi, Managing Director at Blue Whale Foundation, for the thinking and material kindly supplied.