Why Blockchain Tokens are An Unstoppable Force

For much of the past several months, I have commented on the legal and regulatory issues related to ICOs. It is true that in the short term, ICOs are fraught with all sorts of regulatory issues and market failure or regulatory capture in token markets is a genuine risk.

However, when one steps back from the noise and the madness of markets and business and starts to meditate over the social phenomena that lie at the root of technological change, a very different picture starts to emerge. That requires a willingness to disconnect from the world that one lives in and experience the world that is starting to arise in the minds of people who have lives very different from one’s own.

Like most of us well adapted to the current socio-economic framework, I mostly live in the past. I am not exactly a digital dinosaur in that I use uber and airbnb every time I can, I am a former nerd and I can read (and occasionally write) code. But I worry that I might be a digital mammoth just at the onset of the ice age. I am not a gamer. I don’t get virtual goodies from virtual friends and I don’t follow or have online followers who make money off of showing off their gaming skills on youtube… apart from #blockchain and #ai nerds, I am not deep into the tribes of weirdos half my age or less.

So for someone having worked on blockchains for three years, I must confess that I didn’t understand a thing about tokens until I took an anthropological lens to my seven year old’s social life, a fair chunk of which is online and a substantial portion of that online life I do not have access to. I can monitor the websites he has been on and the videos he’s watching but that’s not the story.

The story is in the interactions he is engaged in and the concepts and ideas that little brain is forming all the time as a result of these interactions, which in turn lead to other ideas and interactions. He is part of worlds I am not part of and might be too stupid to relate to.

At a less abstract, less matrix-like level, to understand tokens you have to start with tribes and communities and how the internet is reorganising global society fundamentally. Today we live in nation states and cities and local communities. Tomorrow we will ‘live’ in global online communities in that — we will spend more and more of time in interacting with these digital communities. It is already happening in our homes, our offices, our meetups…

Enabled by iPads, iPhones, games, youtube and high speed internet everywhere, Kids today are forming far stronger online affiliations within which abstract concepts have value, to which an outsider can not relate. Older kids are doing the same, just with less intensity and scope.

Looking closely once a tribe develops a shared concept that has value, it needs to assign it a digital form to enable rich interactions. This digital form — or ‘token’, is then used in ways not very different to a currency. Above all it facilitates rich social interactions. One individual can be simultaneously a member of multiple tribes, each one of which usually is identifiable by the token it uses.

In the minds of the members of these online tribes, these concepts have the same value as a paper dollar bill in mine. These social interactions take the form of games, rituals and social structures that mimic family, commerce and government of sorts. These ‘tokens’ become the primary mechanism for rewarding those who contribute the most ‘value’ within these online communities, and for establishing pecking orders, hierarchies, relative status … in ways not very different from money today. These ‘money-like’ or ‘token’ interactions are fundamental to the structure and behavior of entire online communities and define them. In fact, if you don’t live in that tribe, the value of that token to you is zero.

But then tribes evolve and expand and compete and trade — and sometimes go to war… and die away in ways that states and nations did, just faster. The value of a token comes solely from the community it is recognised by even though a token may be recognised by more than one tribe, no different from the US dollar or Gold. The fate of a tribe’s token follows the fate of the digital tribe… like religion or nation state. These tokens are the economic and sociological backbone of the digital societies evolving today, right now…

Gaming communities have had these tokens long before blockchain was a thing but blockchain changes everything.

If we meditate over the history of internet cash and how years of computer science research got synthesised into bitcoin, Blockchain emerges as a direct consequence of the need within these digital societies for a technology backbone for trust. A community, initially small, recognises that the legacy institutional infrastructure is increasingly anachronistic with the rich online reality of their lives and they find a solution that bypasses it entirely.

In the future, blockchain as a backbone of trust will allow these communities to attain a whole other scale and complexity we can not see from outside. With this backbone of trust blockchain based tokens, like ‘legal tender today’ will remove social friction enabling the ‘tribe’ to be as real as ‘company’ or ‘country’

Is that world any less real than the world we live in today? To me — yes. To my seven year old or a cypherpunk or avid gamer, definitely not. In their worlds, a token is as real or not as a dollar bill or bank account to me today. In a generation or two, when I am gone, his affinity to these tribes will be no less than his affinity to the towns and states we live in today.

And as there emerge these digital societies and networks and communities within them, there will be countless blockchains with countless tokens flying around, arising, evolving, merging, dying. Not one blockchain, not one community, not one token, not one idea — but an infinitely complex richness of socioeconomic interactions intrinsic to the anthropology of these digital tribes.

Will there be a token that enables interoperability between these worlds? Maybe. Will it be our dearly loved bitcoin… maybe. Do I know? Nope. I have not a clue.

Yes I am old. Yes I saw Y2K and I was at times square to see the ball drop as some of us sang Kenny Rogers songs… I listen to old bollywood, classic rock and blues and I hate Justin Bieber who my 7 year old adores. Worst of all… I have used dial up internet for 5ish years.

From the old guard like myself, I hear all sorts of challenge about blockchain scalability, privacy, security, blah, blah — and how statefulness of #blockchain protocols means this idea is wrong or that ideas is wrong and so on so forth. From visionary innovators and likely scammers alike, I hear decentralise a bank, decentralise a consulting company, decentralise the central bank and decentralise facebook. They are all wrong. 99% them are trying to retrofit today’s world onto tomorrow’s future — and most of the time it doesn’t fit. It is not supposed to fit —at least not yet.

Most Blockchain apps today are like watching HD video on 56k dial up… painful and horrible compared to sticking DVDs into a DVD player and leaning back with a soda in Y2K. Yet, I haven’t seen a DVD player since 2010 and I don’t even have a DVD drive anymore. Mini-disk, blu-ray, meh… what is that stuff anyway?

The trouble is — our interactions and transactions today are unimaginable to a blast from the past. Riding a stranger’s car from the internet, staying in a stranger’s home, trading candy crush points, building minecraft worlds… to Ajit as of Y2K… all of this is science fiction. To Ajit as of Y2017, Ajit’s digital life as of Y2K is ancient literature… so ‘homo extinctus’….

So don’t go hunting for token business models in decentralising today… hunt for them in the world of the future.

The term decentralised has its vividity and value, but it can box one’s thinking into today’s world e.g. ‘let’s decentralise a central bank’ which is almost nonsensical — or binary thinking — everything is either central or decentralised, which is not true. Blockchains are peer to peer, consensus based computational architectures with cryptography to enable reliable verification and therefore trust. There is no server, yet there is a client — and that client is a peer, or a node.

Similar to napster — you start a blockchain when you start a node and the blockchain grows when other nodes with the right configuration join in to create a P2P network. Then genius strikes. Cryptography permits verifiability and ownership of interactions. Consensus protocols allow the community to create a shared, trusted state. Smart contracts permit trusted interactions to be enriched infinitely… a protocol token aligns the incentives of participants to make the network stable and sustainable and app tokens allow subcommunities defined by shared utility… layer by layer by layer… we create a technology stack that mirrors the complexity and richness of our societies.

This mirrors how communities are started, formed, grow and die and amazingly enough, Blockchain in the stunning richness hidden in that one misleading word can support a vast variety of social architecture of our digital worlds that are happening as we speak.

Let’s try to envision this world using today’s state of the art — which is #ethereum

Let me pretend I know anything about gaming and say I have an idea for a game called Clan of Tripathis — or COT. I can fire up an #ethereum node and publish my idea on the old, information internet, or on an ethereum domain name service enabled by Blockstack — or a directory service on the public ethereum net. Anyone who wants to play with me can fire up another ethereum node with the same configuration parameters at me and voila, we have a blockchain that’s purpose built for a community that wants to play COT.

As this community builds up… a bit like a ‘minecraft for societies’, it launches a more complex set of interacting decentralised apps that in the aggregate characterise this digital society.

It’s revolutionary if you take a snapshot at a point in time… but when you look along the time dimension, this revolution happens in a very accretive, evolutionary manner… we are shocked looking back 10 years and underwhelmed looking back a year.

In summary, #bitcoin and #ether and the tokens we see today are just a sneak preview of that world and that world is the new reality travelling back to meet us as we travel to meet it — and its an unstoppable force, never mind the price of #bitcoin or #ether or an ERC20Token…or the bubble that may be brewing — or not as it was in dot com days… only to give us GAFA…

This stuff is mind blowing and it’s awesome to be in the thick of it.

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