What Is the Token Economy?

Chapter 4. Outlook

Just as the World Wide Web made it easy to publish a web page with a few lines of code, blockchain has made it easy to issue your own token in a few lines of code to represent any type of value or access right. It took us more than a decade to learn what we can really do with websites, but when we did, the Web2 took off. It might therefore take a while before the power of this new token economy ahead of us can be unleashed, and best practices manifested. At the time of writing this report, many important network effects have not yet kicked in—such as, for example, a widespread blockchain market adoption, scalability, usability, and the fact that the Web3 stack is still in development. There are also many regulatory uncertainties that need to be addressed before network effects can kick in. Although it is difficult to foresee when all of this could happen, it is likely that it will take less than 10 years. Furthermore, it is important to understand that no meaningful token application will run on blockchain only. Many use cases that are attributed to blockchain only—for example, transparency along the supply chain of goods and services—will be possible only in interaction with big data applications, artificial intelligence, and the Internet of Things. The convergence of these emergent technologies, which are all interdependent, will be more powerful than any single technology alone.

Many economists are skeptical that cryptographic tokens can permanently replace ...