New software is being monetized by selling tokens: pieces of code that unlock features for their holders. A token is a key to revealing the full potential of an app, including rights to participate, to vote, or to gain access to premium features or content.
This sounds like a software license, but something new emerges from an ability to trade and make payments with these tokens. Thanks to blockchain technology, and specifically Ethereum, tokens can only be held by one owner at a time and therefore can hold intrinsic value.
An app simply checks that you hold or have made payments with its token and then grants you feature access. As more businesses are driven by software, tokens will become infused into more business models. Where traditional software can be bought, tokens can be bought, sold, and traded.
Tokens can also hold future value as features of a product that are under development. In this way, products can be crowdfunded by selling tokens as promises to deliver. Beyond early financing, though, tokens could have a part in a wide variety of business activities.
Today: Buying Tokens
The Internet is to information as blockchain is to value, so an assumption is that “app tokens” would manifest as a currency layer added to an app. As blockchain apps begin to fuse into everyday life, though, app tokens will reach beyond currencies for both new and existing businesses.
Any company wishing to give their customers a voice can issue an app token. Imagine scanning a Coke can for tokens that can be used to vote on can designs, or a train line that issues tokens for ticketed riders to vote on project proposals.
Any company wishing to create exclusivity for its products or services can issue an app token. Imagine a Las Vegas club that issues a token that gives its holder exclusive membership, or a band that issues a token that can be used to pay for backstage access.
Any company wishing to create its own economic ecosystem can issue an app token. Imagine Tesla issuing a token that can be used to pay for rides on an autonomous fleet, or a game developer issuing a token used to buy in-game items and content.
A company that issues these tokens will give away or sell the initial supply, which could help fund their business. But it all comes together when the holder of Tesla tokens wants to vote for their favorite sports team to be featured on a Coke can during a tournament. Then they trade.
Tomorrow: Trading Tokens
For the first time, as what we value changes depending on our circumstances, we are able to trade away that value for something else, without a need for intermediary currencies or third parties. Ethereum tokens are standardized (ERC-20 is the new HTTP) and the “Internet of value” that is growing on blockchain will be fully liquid. If you no longer need a given app, you’ll be able to trade its token for something new and shiny, anytime.
Apps and tokens will be easy to find because they’ll be marketed to us. However, finding ways to trade is a challenge. This is a job for protocols, and there are a number of recent possibilities. Beyond getting the protocol right, though, a user experience should be as easy as browsing an app store or trading cards. Either way, we suspect that a good solution is on the way and will arrive sooner than later.
Blockchain-driven apps themselves will be baked into our everyday lives through web, mobile, chat, and voice, but the lynchpin of this multi-channel experience in an app economy for everything else is app tokens, and they will be bought, sold, and traded.
Don Mosites is passionate about a future where people freely trade access to the apps and services they use everyday. Ethereum could make that a reality.
Update May 10, 2017 We have since released a new protocol named Swap to address the challenge of trading Ethereum tokens. Please have a look and let us know what you think: