A long time ago in a metaverse far away, the gaming industry realized one of the most effective ways to monetize is by giving users “superpowers.” These include things like skipping levels and improving abilities to win the game faster.
Dating apps, which are consistently some of the highest grossing apps in the world, follow a similar approach. Superpowers in dating apps include more swipes and increased visibility, which leads to more matches.
LinkedIn also follows this approach by giving premium subscribers more searches and advanced analytics, which can lead to finding a job faster or hiring the right candidate.
In crypto, NFTs can be awarded to power users to give them special capabilities like being a moderator in a popular community. So why do it as an NFT? The benefit is that the NFT owner can’t be rug pulled by a centralized entity. Instead, a smart contract will execute the terms based on independently verifiable logic.
Depending on the governance mechanism, the community could decide who gets to be a moderator, what privileges they have, and what qualifies as grounds for removal. Instead of a centralized entity deciding who gets “superpowers” and who doesn’t, the community decides.
To summarize, cryptonetworks enable secure, transparent, internet-native economies. The fundamental unit of value in these economies are tokens. Fungible tokens can be used for money, equity, utility, and governance. Meanwhile, non-fungible tokens are digital assets that enable new business models and can give people a sense of identity, status, and belonging.
There are still challenges to realizing cryptoeconomies everywhere, such as high transaction fees and clunky onboarding, but over the past decade crypto has gone from a fringe activity to something that more institutions, technologists, and entrepreneurs have started to take more seriously.
In the previous decade, we’ve seen cryptocurrency, cryptofinance (DeFi), and cryptoart. Soon, we could have cryptosocial networks, cryptocommerce, cryptofirms, and more.
When thinking about how to design cryptoeconomies, I often think of this quote by Vitalik Buterin, cofounder of Ethereum: “To me, the goal of crypto was never to remove the need for all trust. Rather, the goal of crypto is to give people access to cryptographic and economic building blocks that give people more choice in whom to trust.”
The next decade will be about using these economic and cryptographic building blocks to design a new generation of transparent and equitable internet-native economies.