Don't Throw the Crypto Tokens Out With the Bathwater

Published on by Coindesk | Published on

To assume people will quickly adopt similar models across all sorts of mainstream industries when their livelihoods currently depend upon incumbent centralized systems is also dangerously misplaced.

It would be a crying shame if we threw out token economics altogether.

The challenge is twofold: figuring out which models are most viable as a starting point and how to most effectively bring them to market.

At the same time, token solutions for these or any industries cannot be simply introduced with a build-and-they-will come mindset.

Many projects would do best to build a market that first makes old-fashioned fiat money, but with a clear, fully signaled game plan to later introduce a token model that clearly improves the existing customers' experience and enables the business to scale within a decentralized structure.

A game developer, for example, who builds an enthusiastic community around a particular online game, could later introduce tokens, fungible or non-fungible, enabling users to trade digital goods for off-platform services or rewarding them for widening the community.

In other words, token startups - the vast majority of whom have failed to generate anything near a critical mass of users - should aim to build a pre-token community first or at least build a token model on top of an existing community.

Is token price appreciation - at the heart of many ICO business models - even a viable concept for encouraging user growth? Can tokens be treated as components of the system with their own internal source of value without encouraging users to cash out into dollars?

The new focus, CEO Jonathan Chou told CoinDesk, "Is to have a sustainable revenue model." The question left unanswered was whether this is a transitional step toward a token solution in the future or whether the dream of a decentralized Airbnb is over - and, as such, whether it is even viable to compete with the home-sharing giant on its own terms.

It's important - unavoidable, in fact - that crypto companies are pivoting on their funding and revenue models to stay afloat in these difficult times.

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