Arrival of the Token Economy
Blockchain technology turned 10 years old in February 2019. Despite its evolution over this time, one key question still persists: Is blockchain technology revolutionizing production in ways that create value for the global economy?
Let’s look at the data—at present, the assets managed on blockchains (referred to as ‘on-chain’) are basically a variety of coins/digital currencies, with a total market value of about $150 billion USD. Assets in these chains are generally characterized by high volatility and strong speculation, and fail to provide benefits for the global economy. In fact, since Satoshi Nakamoto, people have wanted to make these ‘coins’ a payment currency, but as of now they primarily serve as digital currencies and do not play a traditional currency role. A digital currency is more of a name than an actual operating currency itself. On one hand, the right to issue currency is a political realization, and monetary power must belong to the state. Therefore, it is very difficult for cryptocurrency to replace fiat currency. Without authorization and support from the state, the so-called ‘digital currency’ is only an idealistic pursuit. On the other hand, most global mainstream assets (tangible and intangible) are not on blockchains (referred to as ‘off-chain’), and there is limited interaction between
blockchains and assets off-chain. So, is a token just another digital currency? Not at all. The basic definition of token is “symbol, sign”, but it should more appropriately be considered a certificate rather than a digital currency. Such certificates can represent all kinds of rights and interests including shopping points, coupons, identity cards, diplomas, real estate, access keys, event tickets, and a wide variety of proofs of rights and interests. Looking back on history, proof of rights and interests has been an essential element of all civilizations of human society. Accounts, ownership, qualifications, proofs, and so on are all representative of rights and interests. As Yuval Noah Harari stated in the Brief History of Humankind, “it is these ‘fictitious facts’ that are the core reasons for the wise men to stand out and to build human civilization.” If these proofs of rights and interests were all digital, electronic, and cryptographically protected to verify their authenticity and integrity, then human civilization would be revolutionized. We call this phenomenon the token economy. Running certificates on-chain provides a solid foundation of trust and traceability not provided by any traditional centralized infrastructure. Therefore, if a certificate is the front-end economic unit of the token economy, then the blockchain is the back-end technology of the token economy. The two are integrally linked and co-dependent.everiToken_Whitepaper_v3.1_US