Blockchain — an old system of rewards

“Tradition is a guide and not a jailer.” ― W. Somerset Maugham

As innovative as blockchain is, it is based on an old concept of rewards. If we look at the current educational system at kindergartens and secondary schools, we can see that is based on a rewards system. Kids earn points for their behaviour and can choose a prize for themselves at the end of the week or a month. Sabotaging points of fellow students are not in their interests because they would get points subtracted for their poor behaviour.

Now let’s take a look at a “crypto-economic model” where miners are promised a reward for solving a mathematical problem. And the winner gets as a reward a right to update the blockchain and a small number of Bitcoins. Because the reward is not paid instantaneously it is in the miners’ benefit to keep the system running. It can also be compared to rewards on your visa card. You cannot redeem the points until they reach a certain level, it provides you with an incentive to make more purchases with your credit card.

An example of Blockchain using a reward system is a content-based platform Steemit. On Steemit you can submit your content and either get paid for it in STEEM digital tokens or get “Steem Power”. The Steem blockchain mints new STEEM tokens and adds them to a community’s “rewards pool”. These tokens are then awarded to users for their contributions, based on the votes that their content receives. Users who hold more tokens in their account and hold more of “Steem Power” will get to decide where a larger portion of the rewards pool is distributed.

Another example is utility tokens which give their holders a set of benefits for the platform usage. Some utility tokens, like the Ternion Tokens, allow you to list the token on the Exchange, pay Ternion Exchange commissions with a discount and access other promotions and perks.

Blockchain is an innovation, it puts power back in the hands of the producers. However, it is still operating on an old-fashioned, but a still relevant system of rewards. This can be regarded as another acknowledgement of the importance and utility of traditional structures, which are regarded by some blockchain radicals as an alternative to the blockchain. However, traditional structures will make the foundation of blockchain strong and resilient against malicious acts and actors.

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