Token Economy 101: Why it Matters and How to Get Involved

With the ongoing evolution of information technology, our economic systems are being transformed and disrupted every step of the way. The rise of information networks is transforming the way economic systems function, both at micro and macro levels.

It all started with the advent of the first personal computers, world wide web, and then finally with the development of online platforms. Since then, the disruptive power of information networks has become more apparent than ever.

Today, the same innovative transformation continues with a new set of technologies, changing the course of human history once again.

How?

We are currently in a process of remaking the very technology that builds the entire internet. Whispers of this so-called web 3.0 have turned into thunderous chatter, with many excited about its primary technology, called blockchain.

Blockchain technology is set to change the way we interact with one another digitally, with token economies being the most impressive aspect of all.

The next stage of economic development centers around decentralization, the key feature of blockchain technology that will shift operations to global information-based networks. Decentralization uses a distributed internet technology stack enables a network of computers to maintain a collective database of ownership and exchanges via internet protocols. This so-called “bookkeeping” is not controlled or maintained by one party or organization, giving it its “decentralized” name. Instead of data being controlled by third parties, it is public and available in one digital ledger that is distributed across the network.

This blockchain technology can be used across multiple industries for a wide variety of reasons. For business, it’s a decentralized ledger and a technology that is the foundation for potential explosion of the digital currencies. For developers, it’s a set of protocols, rules and encryption technologies.

It doesn’t matter which way you look at it — blockchain captures the attention of many and for the first time in human history, everyone can trust each other with the peer-to-peer transactions without a governing, third party centralized management.

The Current World Economy

Taking into consideration the current state of the world economy, it looks good. The world economy has been growing for at least the last four years, some regions showing stronger growth than others. Thanks to this growth and policies that include structural reforms, more jobs are being created and overall unemployment continues to fall. Furthermore, government finances are improving, with both deficit and debt ratio continuing to decline. Investors remain cautious and wages are rising slowly.

What does it mean for us?

While steady growth is generally a good thing, this generally comes with more complex infrastructure with constant new targets in place. This can be detrimental to some banks in weaker, less developed countries that remain weak throughout the steady growth. Ultimately, this translates to wages increasing only gradually and potentially to wage slavery.

To make matters worse, even with the steadily growing world economy, uncertainties and risks are growing as well, mostly as a renewed stress in global financial markets. Stock market prices are on historical highs, with low volatility in bond and equity markets. Prolonged low money-borrowing costs have greatly impacted the global debt levels and established higher financial institutions imbalances. As imbalances continues to rise, cyclically-adjusted price-earning ratios rise along with it. This might trigger an abrupt correction and price fall across the board.

As you can imagine, this can be incredibly destabilizing to the world economy.

This is where blockchain technology comes in to provide a potential solution, or at the very least a bit of stability. This is the foundation of token economics.

How Token Economy Compares

A token is a unit of value that is recorded on the blockchain, with a value and target that can be of any kind. It can be represented by likes on social media, it can be a currency, or it can simply be a way to integrate with the ecosystem of a given project. It all happens on a decentralized network of nodes, which is exactly what the blockchain is. By functioning on the blockchain, exchanges and value are able to take place independent of third parties or external regulations.

Basically, token economics consists of a network of fully independent and totally autonomous nodes, but with a structure that allows the market to self-organize.

This is how Bitcoin came to be and is how all cryptocurrency evolved since the inception of blockchain technology.

Not all can be understood only via bitcoin and bitcoin wallet, though. Our Conscious platform, for example, also functions on a token economy. We provide a meditation training program that pays users to meditate. By engaging with the platform and its users, you are able to earn tokens. The ability to earn tokens as rewards for meditating naturally incentivizes everyone to meditate more.

It is a token economy based on meditation.

This is why the blockchain is changing the way economies develop, grow, and adapt. A token economy can be used in potentially any industry with potentially any incentive.

For example, air traffic control currently uses a centralized system monitored and operated by a control tower. In the world of digital assets, rewards and ecosystems, blockchain planes could signal to each other via a peer-to-peer network that allows users to bid tokens in order to determine priority.

The same technology could be used in healthcare, with token rewards being issued for patients who follow their health plans more closely. Blockchain applications could be used in educational settings as well, with students earning tokens for completing assignments.

New blockchain startups and ecosystems are being created by the minute and investors are more than willing to invest in blockchain projects with the most promising design. Possibilities are limitless, from security tokens to coins that serve as a currency — everything stored safely on bitcoin wallet-like services.

Current Economy Versus Token Economy

The current world economy may be steadily growing, but it is vulnerable to unpredictable world events and often leaves billions of people behind in the growth. Blockchain and cryptocurrency markets help remedy this issue, bringing stability and access to wealth that traditional financial institutions simply cannot offer.

While a decentralized peer-to-peer network has unknown long-term effects as it stands right now, the potential that it has to positively impact the world is undeniable.

Want to be a part of the movement?

Look for blockchain companies that are using token reinforcement to impact positive change or blockchain startups that use a token reinforcement to positively target behavior changes. Search the cryptocurrency exchanges for ICOs that you can invest in and support the positive shift that web 3.0 is making in our current world economy.