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The Theory of a Blockchain Circular Economy and the Future of Work
We are in the early stages of a new chapter in the nature of work, because the blockchain will enable us to work and get compensated inside new circular economies that have their own currency units and their own work units.
This, I believe is one of the greatest themes to emerge out of blockchain technology.
Most work today is compensated via bilateral agreements between a worker and an employer according to a simple contract: you work in X job, and we will compensate you in Y currency.
But what if we had greater autonomies about how we choose our own work such that we can perform a new type of work that may or may not resemble what is traditionally work, and earn cryptocurrency instead of fiat currency.
As a result of that, what if, instead of doing one job, we could hold several paying jobs that are diversified, while not being tied down by the constraints of a single job.
Already, a number of blockchain based businesses are compensating users for their “work” via tokens.
Steemit for example, rewards users who vote-up or write posts on its decentralized content platform.
The theory of La’Zooz (a decentralized transportation platform) was that you earn Zooz points, just by driving your car while the App collects data about your driving patterns.
A healthcare research entity could pay patients or normal people who share their medical data, in exchange for the collective wisdom that is gained by aggregating that information, and returning personalized or comparative insights.
At the heart of making this possible, is the relationship between actual work done, value created, and value received.
Let us dissect what is happening here:
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Users perform some work, either passive (driving and sharing data), or active (voting a post, or making a decision).
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Each marketplace has its own “unit of work”, consisting of a variety of activities.
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Each unit of work “generates value” for the marketplace, for other users and for the end-user themselves. (it’s an expansion of the network effect theory where each user’s actions benefits other users)
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In return for that value, users are rewarded with a native token currency, the marketplace’s own currency.
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That currency can be spent inside the marketplace on another transaction or service (e.g. taking a ride, promoting content), or it can be exchanged outside the marketplace against another cryptocurrency or fiat money.
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The value of the marketplace as a whole increases proportionally with the amount of activity and value that are generated inside of it.
A New System of Work
There is a new System of Work that is unravelling, and blockchains are enabling it. This is not a Ponzi scheme, but rather a new way to generate economic value from work that is valued, and is valuable. Of course, some companies will try to abuse this system, but others that have thought carefully about its mechanics and operations will benefit and enable their users to also partake in their success via the sharing of network equity.
The most important elements that have to be done right are:
- the work being done must be varied
- work being done must be valuable and valued
- users should be able to spend their earned currency internally in order to generate even more value.
What is happening here is the creation of mini circular economies that are self-contained. Some of these models will be created by new companies, while others will be spun out of existing companies. The models coming out of existing companies will be interesting to watch because most companies and their users create an exhaust of value that is not well captured. For example, product users could earn points out of reaching certain levels of usage, but what is the value of these points? Often, they are vanity or status related, and offer no direct value to others in the network. Linking the critical elements together as depicted in my diagram would give a new life to a new economic model.
Could this be the future of work and wealth creation? Possibly.
interesting. allows people to scale in a way
Yes, it could be a source of funding.
ECO Bug Doctor Inc. offers ecological pest control insights by email. Is there a method in place where recipients can freely reciprocate credit at their precieved value?
What type of work is the reciprocal value based on?
Interesting but something is not holding together here for me in two ways.
If everything is decentralized and their is no overall market force then there is no idea of a marketplace as we have it today. You seem to imply that it still exits. You can’t have it both ways.
This idea removes the concept of community and work groups as it says that everyone is multi spread across different endeavors with no loyalty to one over the other, with loyalty to themselves. This flies in the face the face of human behavior and group dynamics as they exist today.
What am I missing?
I love the article William. This is the “elephant in the room”. i.e. the ability to generate value within a smaller economic unit, then be paid in Multiple Currency formats, with a link to external economic units via Exchanges. A multiple currency system includes the present centralized system, so there still can be applications for sovereign currencies though central currency will no longer be essential and the only option, in generating things such as food, shelter and clothing. Variations on these systems in the form of complimentary currencies have been around for many decades (see WIR from Switzerland and LETS “Local Exchange Trading Systems”.) The big difference today is the unfolding of internet-based technologies in the creation of the Exchanges – the new “on and off ramps” in the world of multiple/digital currencies. Entrepreneurs are creating this infrastructure today, just as in the most early days of the Internet, pre-Email; pre-Google; pre-EBay; pre-Facebook. I remember first being introduced to e-mail in 1989. My response was … “why would I use that? I have a fax and a telephone.”
The way I think about these scenarios is in the context of what’s possible.
So, this isn’t for everybody, but some users will find solace in these circular communities, while for others, it may be a small dip, or experiment.
Imagine if your Disqus commenting strength was worth something monetizable, in addition to the real relationships formed there.
Understood so in effect you are not redefining work in any tangible way as that is what I read your post to be saying.
Guess I misread.
Just defining a new income stream, so kind-of redefining work. But, I imagine those getting paid from Steemit were bloggers previously earning from Google ad revenue. The largest benefit I see is that it could tap the potential of many underemployed in ways that can get food on their tables.
Blockchain is such a powerful change agent suffering from a lack of vision when understanding its impact on culture outside of replumbing financial infrastructures.
There are changes to how the work works then there are changes to how it impacts life. These are not the same.
Yes, possibly. But the work generated must be valuable, and not incented by gamification only.
Nice article William. Blockchain looks very promising. I could imagine how it could support different economic models where value is created by a consensus on the big unsolved meaning problems worth solving (BUMPS). Interested parties would self-organise to form ‘problem solving organisations’ (PSOs) and these would ideally be ‘temporary by design’.
The work being done would be valued according to the market it serves and the new capabilities it delivers. The whole thing could be self-contained and loss-less, a type of circular economy. Ideally there would be no need for external exchanges. Everyone has problems to be solved. Maybe everyone who is born would get an equal starting balance. Participants can grow their balance based the value of the problems they solve. This would remove barriers to entry for future generations and stop it becoming a ponzi scheme.
Now, that I’ve finished dreaming I’d best get back to reality 🙂
One thing that gives a sort of friction here is the following. On the one hand you sketch this idea of Small Is Beautiful, with communities and people offering each other services….
But then you propose to use Blockchain technology for the administration of services offered (the General Ledger), similar to the way this technology is used for Bitcoin. But Blockchain is not a Small Is Beautiful technology at all….. firstly, it is complex and requires a lot of hard- and software, secondly, if you use it for open exchange between users who do not fully trust each other (in contrast to using it within one company) then you need a complex trust mechanism such as the Proof Of Work of Bitcoin (there is as yet no better solution in existence). And then you are completely out of the Small Is Beautiful arena and you are burning megawatts of energy to keep your ledger running in a completely commercial capitalist market….. So…. Im not so sure about blockchain technology being the solution for our problems….
Well, after some trial and error, each Blockchain will find its fit. They will come in different sizes and scope, and their complexity will get less pronounced.
In a sense I am already doing this William – I have worked on marketing and content strategy for a number of ICOs already and taken payment both in BTC and their own cryptocurrency. When the crypto hits the exchanges (and it not always has – I lost on Inchain.io) there’s opportunity to glean even more revenue for the work done at pre-ICO stage (much like those how participate in the bounty campaigns). I expect to do well with crypto from DECENT, vDice, Chronobank and some others I hold from bartering skills.
For me one of the most interesting parts of this emerging ecosystem is how to provide utility for the cryptocurrencies, rather than they just become coins speculation instruments based on software and startup performance (news basically). I believe peer to peer renewable energy trading offers a very interesting case case for tying a cryptocurrency to MegaWatt Hours (MWH) captured for instance. We recently entered the online Dubai Hackathon with PWR.Company using PWRToken http://www.hackathon.io/75931
Another project I am writing a Whitepaper for in China for an ICO is for a media token where investors can use the cryptocurrency for paying for events, education, and exclusive content (text and video) around Blockchain Technology. They will also be able to earn the cryptocurrency by writing, helping organise events (like we do with volunteers sometimes in the West), and teaching Blockchain to others.
Publishing Blockchain News (http://www.the-blockchain.com) over the past 16 months has led to a number of interesting projects in this nascent space around Blockchain crowdfunding aka ICOs aka Token Sales aka Appcoins in particular. I believe the ICO model will eventually lead to funding other projects aside from Blockchain-centric models in the near future – and we will be seeing Kickstarter type sites showing up soon – some that will be KYC/AML compliant and others that will operate out of places like Cryptovalley in Switzerland and challenge the SEC and other regulatory bodies. Check out http://www.tokenmarket.net – working with Gibraltar Stock Exchange… they are interesting.
Thanks Richard. The links you shared are interesting. Indeed, token utility is a key success factor.
Thanks for a great article William and I’m enjoying reading several of your perspectives and professional insights on Blockchain technologies on Startup Management.
Considering ongoing debates and trials of introducing a Universal Basic income in parts of Europe, your theory of a Blockchain Circular Economy makes a lot of sense. For platforms who envision integrating user compensation as a business model through blockchain tokens or part thereof, fuels collaborative sharing that should lead to scalability for the platform and provide an added layer of income for its users. A win win!
Up till now, Blackworld.com a bootstrapped startup connecting the world with Africa through media curation and other apps under development, currently restricts user generated content on its network, except for our classifieds section. We made a decision to do this in order to ensure we are providing an ecosystem that provides quality of content and not quantity in order to ultimately compete and align with global media companies such as google, facebook, bbc etc. We go through pains to organically source what you currently see on Blackworld, by excavating through the mine field of 250 million videos on Youtube to curate great global content instead of randomized feeds. Like a TV network, our organic methodology helps improve quality provision and user retention.
Now that Blockchain use cases can be dispensed creatively going forward, it implies we can evolve thoughtful ways to incentivize users to mine qualitative content subject to the curation standards we set for some form of token compensation. We are also developing our global web search utility, away from using Google or Yahoo API’s, which should allow a new form of social interactivity, whereby users can post reviews or recommendations within web search results. Here too we should be able to compensate users with tokens for helping us provide the next gen of social web search. Particularly prioritizing Africa related search results in our global web engine for consumer discovery.
The above are just two blockchain circular examples that come to mind of what is possible within our media network going forward, post a potential ICO. There are several other token possibilities ” internal and external ” as we develop applications for our ecosystem.
So William, I think your insightful article here actually not only helps blockchain startups think about token utilization to help growth hack their platforms, but most importantly, it provokes thought about the future of what a collaborative sharing economy looks like along the blockchain! This considering the impact of disruptive robotic technology that inevitably cannibalizes the future of work. There are 7 billion people on this planet and growing with less and less to do as we compete with AI and robots. As blockchain utilities evolve, could allow users to collaborate doing things they actually love.
I believe we all have challenging and exciting problems to solve, that can lead to future prosperity in a decentralized and sharing global economy.
I look forward to learning more from your insightful articles going forward William and will connect and follow you on Linkedin. Best, Robert Haastrup-Timmi.
Interesting is the word ‘exhaust’.
Another word for this is the surplus.
For example, a cinema or bowling alley that isn’t trading at its optimal capacity, has a surplus of capacity. Its investment is sunk, so it needs to perform better – get more bums on seats and more people bowling.
That surplus capacity has value, and is valuable, but it is ‘locked-in’.
If the bowling alley or cinema, joined a marketplace where it could trade that surplus capacity for other things of value (think barter or contra deals), then it would become a more sustainable business.
It would unlock the value of that surplus.
So the token would store the value.
But where, why and how the token is generated in the first place – how it is earned into existence – well that is the opportunity for mankind to set some new rules and standards for valuing the stuff that the markets don’t see value in (not regarded as ‘valuable’).
So a secondary marketplace is what i see. A mini-circular economy, as you describe it, but one that clears excess stock and spare capacity before its value perishes.
One that defines and measures contribution to community in a way that is simple and universally understood.
A variety of differentiated activities that are all mutually reinforcing because they contribute to the common good through the portal of community.
Art, music, grass roots sports, care, volunteering and so on are all activities that the market does not value properly.
Strange when the public regards them as valuable because without them, the economy would collapse.
So they are undervalued activities.
The campaign for business to #bekind is aiming to address this gap in the market.
Watch this space!
Thanks for sharing your views William. I think you are probably the best writer in this field, right now.
You should come visit us in Manchester – the home of the co-operative.
You’d be very welcome and we’d put you on a party – something we’re famous for!
Best wishes, Mike
Nice work Ken. I think you’re talking about a line of credit when you talk about a starting balance. I’m not in favour of this because you’re missing an opportunity for people to earn the credit, rather than having it given to them.
‘Something for nothing undervalues the something’.
People want to work and become masters of it. It’s in their nature as humans. Everyone is good at something. And being good at something, is valuable because for the individual, it generates pride and dignity.
Otherwise in my view your dream is becoming reality.
We mustn’t allow a machine to validate our work. Proof of work and proof of stake must always be determined by humans because only humans can value something. Machines might be able to count, but they can’t value and we mustn’t get the two confused.
Agree that decentralising everything is not the way forward. Somethings should be (power for example) but not the database. That’s where the value is and that needs to be protected and monetised in a way that redistributes power and resources that currently are captured by the big-boys.
Your comments Michiel were two years ahead of their time. Congrats. Please hit me up on twitter @mikeriddell62 if you would – i’d like to get inside your head and work a bit more. x
Rather than reciprocal credit, try ‘mutual credit’.