I’ve written a bit here about crypto tokens. How they can be a monetization model for new protocols. How they could be a new monetization model for online media. How they can be a business model for an online “commons.” And why USV invested in a hedge fund that will invest solely in these tokens.
I believe that these crypto-tokens are an important innovation in the world of technology. They allow for the financing and monetization of technology projects that rely on a network of contributors (of software engineers:open source, of contributors:online communities, of computers:p2p systems, etc) to deliver value to the market.
To date, we have mostly seen tokens used as financing vehicles. The last time I looked, over $300mm has been raised in “Initial Coin Offerings” (ICOs) to finance projects like the ones I referenced above. That number continues to rise as more tokens are sold to raise funds to develop these new businesses.
But the longer term implications of tokens have more to do with monetization than financing. And I think its a very elegant and powerful idea that the same “currency” can be used to both finance and monetize a network.
So with that preamble, I am excited that the first ever Token Summit will take place in NYC on May 24th and 25th. This event is being organized by AVC regular William Mougayar and Nick Tomaino, who runs The Control, which I blogged about a few months ago.
William blogged about Token Summit today and says this about the event:
We have identified the following themes that will be debated in a variety of formats, including on-stage interviews and panels.
Token-based Business Models
How do tokens contribute to a business model? When do they make sense? How does an entrepreneur monetize? Where is the real value?
Token Protocols and Platforms
What are the emerging token-based assets? Where/How are we going to trade them? What are the implications for fund managers?
Lessons and best practices for pre, during and post initial cryptocurrency and token sales, including governance.
How do investors and users value tokens? How does a token transition from a speculative to utilitarian function?
Legal, regulatory and ethical practices for token creations.
I plan to attend this event and I encourage everyone working in or around this space to attend. It will be an interesting and lively discussion.
If you want to attend the event, you can register here.
Any chance the event will be live streamed?
Probably not (it’s expensive); but videotaped for later republishing.
Looking forward to it
2008-2013 or thereabouts – it felt you could keep up on the cutting (if not bleeding) edge of consumer tech relatively easily. X many publications, Y many blogs etc – it seemed contained and eminently doable – without swallowing up every waking moment.Nowadays, thats a pipe dream. Specialisations upon specialisations. So much disruption so many advancements. So many exciting things to keep tabs on.It felt for a while we were heading down an endless curve of lacklustre tech and incremental disruptions. Seems we were actually on a U-curve.”this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning”
i agree. i am not paying much attention to areas like AR/VR but i know that they are experiencing lots of innovation. i just can’t go deep on everything. there is so much innovation going on!!
Always has been, always will be.
Couldn’t agree more….though necessary to look at it from the innovation perspective. I’ve been reading lots of Twitter chatter as of late, referring to many of these tokens as scams (which I imagine some will end up being), ecosystem in a bubble, etc.,…. man are you missing the point if you’re painting them all with the same brush!!
Here are a few I’m especially excited about, Golem (GNT), Ethereum (both ETC & ETH) and watching Sia (SC) and Decred (DCR) very closely. Bitcoin is my 1st love though…..
Your list looks a lot like mine 🙂 Never heard of decred but excited about dfinity
Why are you saying “painting them all with the same brush”?They are like startups. Many will fail of course, but there will be winners and lots of lessons along the way. We just want more people to get smarter about this topic. This isn’t an event that will hype ICO. To the contrary. I’ve written plenty about being cautious. http://startupmanagement.or…
I guess my comment was somewhat ambiguous, I apologize. I was referring to some of the Twitter chatter that implies most alts’ are useless or a scam which I would disagree with. Providing no utility.
I think he’s suggesting that a number of ICOs were conceived from day one as criminal enterprises.
many of these tokens as scamsWhat is the definition of a scam? Many times is has to do with how the marketing is done or who the marketer is as much as the product. (See art below).if you’re painting them all with the same brush!!You could argue that there are plenty of things sold in the world that looked at one way could be considered scams. Because they are based on the ‘greater fools’ theory of investment.  One of the best examples of this are certain types of art.  But the funny thing is even in art there are levels of ‘scam’ depending on what the art is and where it is sold.  For example greater fool done at a well known auction house is of a higher level than done on a cruise ship. Most legitimate art buyers and even people who aren’t art buyers think art sold that way takes advantage of the participants because of the way it’s sold and the people who are typically the buyers.  https://en.wikipedia.org/wi… Others include old or limited edition cars, wine, real estate, stocks the list is endless. This raises an interesting thought. Does anyone sell a financial product that will guarantee the value of an art investment such that it will not drop below a certain point. But certainly the characteristics of some of those buyers also appear at the well know auction houses.
Again, I’m in support of the ecosystem as a whole….my comment was a rebuttal towards the Twitter chatter, whom “paint all these tokens with the same brush” in which I believe is truly unfair. There is some very promising innovation happening at these levels and provide a breeding ground for some new and exciting ideas.
no doubt this is the model that saves the world…..alas, all for naught less the x-rate is stable.
Saves the world from what?
I’m in – your annual meeting gave me the fever.
Is the Ethereum Foundation out of cash?
Why are you saying that? Have u seen the price of ETH lately?V said they had enough money for 4 years and that was when the price was about $10-12. Now, it’s almost triple that. I don’t speak on their behalf, but you can do your own math.
On the grapevine I heard that the Foundation (specifically) is running low on funds due to a very high development burn rate. The market price has pumped on the back of the BTC ETF speculation, but is that the Foundation’s financial position?
Completely specious and provably false. I’m not sure what grapevine you’re listening to but that’s so false it seems to me it must have been made up intentionally to spread negativity.
The Ethereum Foundation has over $20 million in USD at the moment.Bitcoin maximalists have been trying to spread this rumor for years now.
Is that available to view in published accounts?
Just going to put this here. Ethereum Foundation has $35m USD of Ether at current prices: https://etherscan.io/addres…This does not include several million more in bitcoin and fiat.
Intrigued and a may go– but congrats nonetheless!
Big, big fan of William.Still don’t see normals ‘getting’ Coins.Still don’t see coins as foundational to a big mainstream application.Using the ‘explain it to a 5 yo’ standard, I can tell you what Intel did for PCs but I can’t fill in the blanks here…….Ethereum does ______ for ______.
The problem might be is Erherum does cash transfer for illegal activities (drugs, prostitution, arms transfer)
There’s been some history of that with Bitcoin (ie, Silk Road etc).I’ve seen _zero_ evidence of that with Ethereum. Part of the reason is that Ethereum hasn’t marketed itself as a payment method like Bitcoin has.
wow. that’s a superficial extrapolation with no data to back it up, really :)the internet and cash are culprits to much bigger vices – should we ban them too?
You will see it soon! Maybe not 5 year olds, but teens and older. My upcoming TEDx talk will explain the Token Economy.
I am sure that will have it in terms I can get.
All the best for your Talk and the Summit.I wonder, do you really want to call it the Token Economy ?And – A Token Summit on the Token Economy ?”The X Economy” – that phrase is sweeping in its scope. I don’t like how that sounds when “X” = “Token”.But I guess that ship has sailed.p.s. I know folks who have been around a while will remember the time of IBM TokenRing. A couple of things – (1) – Technology naming was less consumer-friendly back in the ’80s and ’90s, its a different world today (2) – Even back then, the IT guys knew of TokenRing, but users on the LAN usually did not know or care. This is different.
for a lack of a better term…what would you suggest, otherwise?
Will you be video recording everything and making it available online later? I can’t be there but really wish I could.
that’s the plan !
> Still don’t see normals ‘getting’ Coins. Still don’t see coins as foundational to a big mainstream application.The somewhat cliche — but likely correct — analogy is the internet. In the early 90s, people were saying all these things about the web. Heck, the famous Bill Gates interview where David Letterman mocks the internet was in 1995.Mass adoption takes time. It takes infrastructure and middleware to be built, which allow the consumer applications. However this is a fast moving space and some of this is already built.Projects like https://status.im/ are working on mass adoption by abstracting away the blockchain to make it easy and useful for regular people.
Evan, my point is that I am a bridge to normals and I don’t see it.
> Still don’t see normals ‘getting’ CoinsThe UX really isn’t that complicated. The ‘coins’ are going to be tied to your Ethereum address which will live in your web browser. Instead of signing in to a bunch of different websites and maintaining a bunch of separate accounts, you’re going to login to your web browser with one account which will know your Ethereum address and thus the balances of different tokens that you own. Ethereum applications are going to read your public Ethereum address from the browser and verify your identity and then show you a user-specific experience. If you want to transact tokens inside the application you click a button on the application and then confirm the transaction from your browser.From the user perspective, all that you’re really doing is signing into your web browser. It’s not a large barrier to entry. Obviously, it’s not that fluid to transact Ethereum tokens today but it will be pretty soon.
I would add that tokens are even more than about monetizing for entrepreneurs — they’re also about empowering people to own the products they use and foster stronger network effects than ever seen before.This aspect is still under appreciated imo — wrote it about it on The Control yesterday: https://thecontrol.co/the-t…Excited to discuss in person in May!
1) Why is mining so central to these models? (That is, why limit participation to people who mine for a living ?)2) Why can’t we get a number / a percent of the 200 billion circulating is directed to illegal activity?
> 1) Why is mining so central to these models?Ethereum has always planned to move to Proof of Stake instead of Proof of Work as its consensus mechanism. That move away from mining may happen as early as this calendar year.PoS will lay the foundations for scalability, as well as stop wasting so much electricity on PoW mining.
This seems like the no brainer for adoption, gamification. The idea that you need to located by a river in china with low cost electricity to participate is insane.
Yes. There are significant security questions about PoS that remain unanswered though. A PoS approach that maintains security is a holy grail.Satoshi’s breakthrough was Nakamoto Consensus which is still currently the optimal balance of decentralization and securit that exists. But there are several attempts to create systems that improve on this that are promising.
1.) Mining is really about two things: reaching consensus in a decentralized way and securing the network. Without decentralized consensus and security, blockchains have no use. Bitcoin mining requires users to run expensive rigs to participate so it’s not inclusive but other token models have other ways to reach consensus and secure the network and is more inclusive. I’m excited about these.2.) It’s hard to quantify dark market activity because the people that conduct this activity try to hide it
Buy why does decentralized consensus require mining. The system is turning out not to be decentralized at all if it requires one to mine and the economics of mining dictate only large scale mining projects. we already have that, it’s called visa and MasterCard.2) I have to call BS on this, I don’t believe for a minute those working full time in this don’t know this.
Hi, I found the registration link; do you have a venue? Thanks, Carrie
Not yet. We’re shopping for them now. If you have suggestions, let me know. But it will be NYC!
Suggest https://venuebook.com/ (a gg investment).
thanks. will look.
How many people do you need to be able to accommodate?
Thanks for your email. 350-400.
I had many, many “token summits” w/ my HS buds back in the day. Who knew we were so ahead of the curve!
I will come! To Meet William will be fantastic!
Thank you. pleasure would be mine 🙂
so you know when you login to amazon.com IRL, instead of doing that you’re going to login to your web browser. Websites will read your account information from your browser automatically without you needing to do anything. You will store your credit card information in your web browser (you can already do this). Then when you go to a website you will buy tokens on the site for USD from your browser, and then when you want to interact with content on the site you will use the tokens which live in your browser via an Ethereum bridge that the user never sees or needs to know about.
How is that better than how Incurrently do it – Visa?Plus, something goes wrong, Visa backstops it.Ethereum?Product in search of a need?
Visa transaction fees are 2.9% + $0.30… On Ethereum right now they’re less than half a cent. You can also divide the base unit of Ether to 1/10^18 fractions which enables payment models for things like reading articles or watching Vines that aren’t feasible with Visa. It also works across seamlessly across the globe, there’s no currency conversion headaches or anything like that.It’s also much easier for developers to integrate than credit card payments. Why did Stripe take off when you already had PayPal? Stripe wasn’t a product in search of a need, it just made it significantly easier for developers to integrate so they migrated to it. Ethereum is easier than Stripe even to set up so you’ll see it used as payment mechanism for a lot of hackathon projects, and data feeds but eventually larger projects also.Ethereum is better for the user because your card can’t be charged arbitrarily. Right now anyone can charge your credit card, either by fraud or a subscription service that keeps billing you maliciously, it’s a massive headache. With Ethereum you can only explicitly send money, you can’t charge accounts so it’s much harder to steal.You can also make anonymous Ethereum accounts, so if you want to pay for something without revealing personal information that’s in the users control whereas with Visa your personal information is given by default to whatever service you’re using.My point is that it actually is an improvement in a lot of ways, it’s not just reinventing the wheel.
That’s the best explanation I have seen, with the caveat that I have not looked very hard for good explanations.Visa, but safer and cheaper has a lot of legs with consumers. All consumers know about CC fees, mainly b/c of Amex.Transaction products always have two markets – supply side and purchase side. I could see this being adopted by devs but not by consumers……b/c devs will get it and consumers will be scared of it…..unless someone explains it to them clearly.Thanks.I am 3/4 converted.
There will be resistance from some types of people definitely but I think you may be surprised how smoothly people can adopt tokens and understand their value. The reason in my estimation is that they’ve actually been primed to do so by the already massive digitization of our monetary system. For young people cash interactions are already unusual, they’re used to seeing their bank account on their screen, they’re also very often exposed to Playstation or Xbox Points or any of the other unending amount of company specific tokens, reward points, airline miles, etc. Companies have basically already trained a large portion of the population to understand and expect that non-government backed tokens can and will have a monetary value that is easy to extract and useful. All of the decentralized backing and everything else will be unlikely to hit the surface knowledge of an average user as the average user will just know they have more control than before, lower fees, and potentially appreciating digital assets. Since projects are built on top of Ethereum and use their own tokens in whatever manner they choose (using a token standard on Ethereum called ERC20) users might use an app token built on Ethereum without knowing the word token, what Ethereum was, how its properties affected their experience, etc. Ethereum’s properties and benefits can be consumer facing but in many cases would not need to be. There’s a great project called Status, attempting to build a WeChat-like product which interfaces natively with the Ethereum network and thus anything built on top of it. Users would then seamlessly send Ether, or any other dapp token in their account, to anyone else through a simple chat interface.Ethereum allows for proof of uniqueness in digital goods, which with a project such as Ownage, would allow things like in-game currencies or magic swords to be tradeable as tokens on Ethereum. In a few years kids may be paying for their coffees directly with money earned playing the latest MMO. Their gamecoins automatically being sold for Ether which is then converted to USD and deposited into the coffee shop’s account immediately. Add in the effects of the anchoring of digital goods onto the blockchain using cryptoseals like Chronicled is doing, and we very well may end up in a scenario where you can pay for anything using well… anything.
I might be able to see it as the glue that connect a much wider assortment of stores of value: its not a store of value itself, but the network that seamlessly ( and only w micro-fees ) connects gold to USD to share in FB to Yuan to AppPts.If it eliminated the idea of fees between stores of value……..
It may not be considered or intended as a “store of value” exactly, indeed people are looking into building “stablecoins” and tokenizing gold for that, but Ethereum (if it scales) will end up having a ton of value if a lot of economic activity is taking place on it. The fees paid into the system and the usefulness of the system are what back its value proposition, but additionally the system itself will rely on Proof of Stake, which means the security of the system becomes partly a function of its price. So the more economic activity taking place on Ethereum (and the more value contained in ERC20 tokens on it) the more incentive there is to hold Ethereum in order to secure it from being attacked. It might be considered security as a company who relies on Ethereum to own and stake Ether, which would be a strange situation in which securing ones product would actually be somewhat profitable. Token ecosystems are all about using the advantages of game theory and programmable logic to create incentive loops in the hopes of increasing value. Ethereum’s incentive structures are very impressive and provide a lot of reinforcement of behaviors that could increase the price. That of course relies on it being adopted though, so like most things mass adoption is the key to real true longterm value here.