Token money future possibilities

A number of different communities could benefit from creating their own token money, and token money could be implemented in a number of ways.

Communities

Countries

Nation states could decide to migrate their existing currencies to adopt Web3 technology. Token money could be used as a national currency with similar or completely new governance structures to manage that system of money.

Local communities

Towns, cities or small geographic regions may want to experiment with new forms of money in their own local area.

Online communities

Online communities commonly exist for different topics, hobbies and interests. These communities may have economies the are large enough to benefit from their own medium of exchange. They might have ideas for new features or properties that are unique to the requirements of their community.

Online games

Massive online multiplayer games could benefit from their own token money to facilitate exchange in these online environments. These games often have their own economies with items that can be exchanged and services that people provide. Game based economies might even lead to environments where people are able to work in these economies full time as their primary source of income.

Adoption of token money

Unlikely that no token money is adopted

The least likely outcome for Web3 networks is that no token based money is adopted. This would mean that the network money would be adopted as the primary medium of exchange. This is a very unlikely outcome as there are so many different communities that exist that could require a different system of money and different implementation approaches. It would be much more risky to use the same medium of exchange for every community that might exist across the world due to different growth rates and usage patterns. Widely using the network money instead of token money as a medium of exchange would mean there would be zero room for error due to how reliant people would be on using a single medium of exchange.

Unlikely that only one type of token money gets adopted

One implementation of token money could become a globally adopted medium of exchange due to its popularity and effectiveness. Although this is possible it is still unlikely that a token money becomes the only adopted token money due to the differences in requirements and preferences in how these systems of money are managed across different communities.

Very likely that multiple types of token money are adopted

The most likely outcome for token money is that there will be many implementations that each have their own properties and governance processes. Global currencies might emerge that become popular for certain use cases. Community based token money should cater for the specific requirements and preferences of that community. Because Web3 networks are open and permissionless, it could be reasonable to expect that we see an ongoing amount of competition between systems of money, where new ideas about how to implement and govern these systems continue to evolve and improve over time.

Implementation & usage possibilities

Token money could be implemented and used in a wide variety of ways. The scope and potential of what could be adopted is actually quite difficult to comprehend. Token money is fully programmable so the system of money could work in any way that a community prefers. Incentives could be introduced to encourage a wide range of behaviours and outcomes.

If the network money is effective at ensuring the network is always operational it opens up the opportunity to experiment with many forms of token money. Systemic failures in token money should not jeopardise the stability of the network. Alternative forms of token money can be immediately adopted and at low cost. Web3 networks help to create an environment where many forms of token money could be adopted and experimented with.

New governance structures

The governance for systems of money can be completely reimagined to accommodate the requirements and preferences of each community. Some communities will prefer automated solutions that require no governance input at all. Other communities might want to have parameters that they change through voting mechanisms.

New mediums of exchange ideas

The purpose of a medium of exchange is to exchange value from one person to another. Money enables someone to pay for goods and services using a common medium of exchange. Systems of money could introduce other things that people find valuable. Other factors such as the commitments of someone's time around certain initiatives or causes could be considered. It could include provisions for someone's time or provide future access to certain resources. A system of money could incentivise certain behaviours by giving people rewards for conducting exchange in a certain way or for providing certain contributions prior to the exchange. These incentives could be targeted at trying to generate outcomes that are most beneficial to the community as a whole.

Commodity assets adopted as money

Anyone is able to create representations of assets such as gold, precious metals and other commodities such as wood, corn and wheat. Token based representations of these physical assets could represent ownership over that commodity. Tokens are highly divisible and fungible. If two users both wanted to own these types of assets, these tokens could end up being something that people use as a medium of exchange. Commodity based token assets might not have ever been intended to be a form of money however it is possible that they get adopted as a medium of exchange in certain circumstances.

Fractional ownership based money

Valuable physical or digital assets can also be fractionally owned. This can turn a single valuable asset, such as a house or collectible, into something that could be owned through a large number of tokens. Token ownership would make it highly divisible and fungible. Similar to commodity assets, there could be situations where multiple people are happy to hold and use these token assets as a medium of exchange. Token based assets greatly increase the likelihood that a range of assets could be used as a medium of exchange, even when they weren’t intended to be used in that way.

Incentive layers

Token money could remain simple and be solely focussed on just being a good medium of exchange. However the applications and communities that adopt this money could introduce incentive layers for people that are using specific token moneys or using the money in a certain way. For instance, one business might offer people a discount to people that use the community's money and that also have a recent proof of contribution towards some initiative that they are looking to incentivise.