Blockchain technology, and the cryptocurrencies, tokens and other digital assets it has engendered, may be moving us toward a model of programmable money that incorporates an automated internal governance of common resources and encourages collaboration among communities.
Once a community associates scarce tokens with rights to these resources, it can develop controls over token usage that help manage public goods.
If those goals can be met, this emerging token economy offers society an entirely new paradigm of money and value exchange.
Now, with the advent of blockchain technology and the cryptocurrencies, crypto tokens, and other digital assets that it has engendered, we may be moving toward a model of programmable money that can deliver a more automated system of internal governance over common resources.
Tokens thus offer a way to codify into money itself a function that executes the community's expectations regarding people's distinct rights to common property and the associated obligations that come with those.
If we can capture these quasi-legal notions in a token, it becomes a meta-asset, a thing of value that is simultaneously a governance vehicle.
The great promise of the token economy is that it might solve the Tragedy of the Commons.
In addition to its PoW consensus system, which compels even unidentifiable rogue players to act honestly, there's another powerful idea behind bitcoin that has helped frame new ideas around how crypto tokens can help communities manage common resources: that of "Digital assets." Because PoW assures the integrity of the Bitcoin ledger and protects against double-spending of bitcoin currency, each unit of that currency can be treated as a unique item.
With scarce digital tokens, communities with a common interest in value generation can embed their shared values into the software's governance and use these meta-assets as instruments of those values.
A case in point: the soaring value of the Ethereum protocol's native token, ether, due to the popularity of the Ethereum-based ERC-20 token standard for ICOs.These permissionless open protocols, upon which anyone with a token can start developing any idea, are another form of a public good, a commons.
When Money Becomes Programmable
Published on Feb 22, 2020
by Coindesk | Published on Coinage
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