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Web3 has taken another step forward. It will produce new systems and social structures to meet human needs for safety, love, belonging, recognition, and self-realization.
Original title: “Dror Poleg: Token Society”
Written by: Dror Poleg, Co-founder of Real Innovation Academy Translation: WhiteForest
This is a great article! This article was published by Dror Poleg on May 3, 2021. He started with the development of the city and described the deconstruction of the relationship between people during the evolution from rural to industrial city to a large central platform. From relying on the mutual trust of people, to relying on the rules of the city, to relying on the centralized enterprise platform, the traditional trust model was subverted in this process. He finally described the blockchain-based web 3.0 society, where people can conduct trustless transactions on the blockchain by tokenizing any physical objects. This will generate new systems and social structures to meet human needs for safety, love, sense of belonging, recognition and self-realization.
The emergence of industrial cities reshaped society. It changes the way, place and reason people interact for entertainment and profit. The emergence of the World Wide Web has had a similar impact. Now, the development of the Internet is expected to reshape society again in new and surprising ways.
The technology behind cryptocurrency will power this evolution. They will enable people to buy and sell more things, including their attention, gestures and compassion. They will force humans to establish new systems, new relationships, and new reasons to treat each other well.
To understand our development direction, let us start with some urban history.
City of wealth
In 1903, the sociologist George Simmel became interested in a new profession in Paris, quatorzième. Parisian society considers it unlucky to sit at a table with 13 people. In order to mitigate this “risk”, the political party paid to invite people to join them and changed the party into fourteen people, quatorze in French. At first, this may happen randomly. But over time, it developed into a suitable profession. As Simmer explained:
“They are people who identify themselves through the signs on their residences. They will wear the correct costumes and be prepared at dinner time, so that if the dinner party should consist of 13 people, they can be called quickly.”
People had superstitions long before cities appeared. But the city makes dinners more frequent. More importantly, a large city like Paris has a large and compact population, enough for a group of people with special needs to find people who provide specific services on demand.
Simmel observed that “the city is the place with the highest division of labor.” Urban density has brought economic specialization and matching of supply and demand to a new level. It reduces the cost of finding, evaluating (via word of mouth) and paying the right person at the right time. Lower transaction costs and specialized labor bring higher productivity.
But cities not only make people richer. They also changed the relationship between people.
Simmel’s colleague Ferdinand Tönnies observed that there are differences between rural and urban societies. He used “communal society” and “associational society” to describe this difference.
As Britannica explained, in “rural, peasant society”, human interaction is based on traditional “definitions and norms.” People “have “simple and direct face-to-face relationships” with each other. These relationships are “natural” and involve spontaneous “emotions and emotional expression.”
In contrast, people “interact with government bureaucracies and large industrial organizations in a different way in an international society.” There, “rational self-interest and careful calculation have weakened the traditional bonds of family, relatives, and religion.” In turn, “interpersonal relationships are more objective and indirect, and are rationally constructed for efficiency or other economic and political considerations.”
Industrial cities make most people interchangeable, and some people become priceless. They make relying on personal relationships more difficult and unnecessary, and easier to conduct business.
A century after Simmer and Tönnies, a new type of density reshuffled interpersonal relationships.
If a city with a population of 2.8 million can spawn new occupations and change the relationship between humans, what can a city with a population of 2.8 billion do?
This is the number of users using Facebook. In the first quarter of 2021, the company generated $26.17 billion in revenue, an increase of 40% over the same period last year. It achieves this goal by providing a place for people and businesses to find, socialize and trade with each other.
But Facebook is not a larger version of an industrial city. It is not just about establishing more business connections at the expense of public relations. Facebook turned the community itself into a business. There is no need to sell or buy anything. Even simply talking to your friends or sending photos to your mother is now a business activity. More and more of our personal interactions occur on private platforms; these interactions are recorded, analyzed, and manipulated for profit.
Online platforms can profit from our online interactions with people we trust. But what is really impressive is that such platforms can profit from offline interactions with people we don’t trust.
Room with comments
In 2004, Yochai Benkler became interested in the emergence of markets based on social relations rather than money exchange for goods and services.
In Sharing Nicely , the Yale University law professor highlighted two main examples. The first is “carpooling”, the process of carpooling to work, which accounted for one-sixth of all commuting trips at that time. The second is [email protected], a network of more than 4 million volunteers who “donated” the processing power of their home computers to analyze data collected from space (looking for aliens). In the footnote, he also pointed out the existence of the Wikipedia website-“an encyclopedia of thousands of volunteers.”
Two aspects of these projects impressed Benkler:
- They are efficient enough to compete with for-profit or government-funded programs that meet the same needs, and
- They rely on “loosely connected individuals” who cooperate in a “completely impersonal” way.
His article emphasized the need for further research on “social relations in general, and the emerging importance of sharing in particular.”
Within a few years, Benkler’s idea of a “sharing economy” provided the impetus for the fastest growing company on the Internet. Uber, Lyft, and their cloning companies around the world have turned carpooling into a multi-billion dollar industry. WeWork and its competitors have taken the same approach to the idea of shared offices. Rent the Runway, JustPark, Rover, EatWith and others enable strangers to share clothes and parking spaces, and visit each other’s homes to take their dogs out or share meals.
Airbnb is the epitome of the new “sharing economy” spirit. Since ancient times, adventurers and independent souls have constantly attacked the existing environment. But there is no reason to believe that this kind of behavior will prevail among people with spending power. As an early non-investor told the founder of Airbnb: “The potential market opportunity does not seem to be big enough.”
But Airbnb succeeded. To date, more than 150 million guests have used its platform and lived in homes managed by nearly 3 million landlords. As Ben Thompson pointed out, Airbnb not only allows these people to find each other; it helps them trust each other. It accomplishes this by using its community to provide comments and photos, provide payment and insurance solutions, and later conduct background checks on landlords.
Airbnb systematizes and commoditizes trust, transforming it from unique personal qualities to impersonal characteristics that can be “attached” to anyone. The founders of Airbnb see their platform as a return to the pre-industrial world. CEO Brian Chesky wrote in the company’s mission statement:
“We used to take the sense of belonging for granted. Cities used to be villages. Everyone knew each other, everyone knew they had a place to call home. But after the mechanization and industrial revolution of the last century, those who trusted And the sense of belonging is replaced by mass production and impersonal travel experiences. We no longer trust each other. In doing so, we lose some important content about what it means to be a community.”
But Airbnb is not the opposite of the process that Simmel and Tönnies determined a century ago. Airbnb is the culmination of this process: the industrialization of trust itself. Transform personal preferences and characteristics into non-personal products that anyone can buy. Dense crowds-cities, and later networks-have allowed “natural” interpersonal relationships to be replaced by a series of interactions driven by cold logic and necessity.
People do not trust each other, but place trust on a platform that supervises more and more interactions. Sharing an apartment, borrowing tools, and hitchhiking are no longer things people do for each other or each other. They are products.
But sharing physical space and inanimate objects is just the beginning.
“Is it difficult for you to enter the store alone? Do you lack a player on the team? Do you need someone to reserve a place for you? I am willing to rent out myself as a person who does nothing.”
Morimoto Shoji posted the above content on Twitter in June 2018. He originally planned to provide companionship for free, but began to charge due to high demand. Later, more than 3,000 customers rely on his services to meet various needs. As Emily Cope reported:
“People rent him for various reasons, he said, but most people feel bored or lonely and just want to be heard.
He was hired to have lunch, take pictures on Instagram, accompany a divorce applicant, catch butterflies in the park, and listen to the hard work of health care workers.
One hired him to describe the murder he committed, while another paid Morimoto to take him from the hospital to revisit the place where he attempted to commit suicide. “
Prostitution may be the oldest profession in the world, but this time is different. Morimoto is at the forefront of the new sharing economy-where people share themselves. But incompleteness is not necessarily sex.
Although prostitution is never uncommon, a certain threshold separates buyers and sellers unless they are both eager (or desperate) enough. It was never just about sex. There are hundreds of stories about those who go to the brothel just to get a hug, someone listen to them, or just to hear another person say their name. But those who want all of the above, even if they only want a specific part, still have to go to the brothel and pay for the full service.
Online platforms reduce the cost of finding, paying and trusting strangers. The threshold is low. Therefore, even the simplest actions or help can be directly monetized. More importantly, only the platform can match buyers with specific needs with sellers who can meet those needs without paying any other fees.
As I mentioned in Lovers and Leavers, this process is reflected in the growing popularity of OnlyFans, a website that allows individuals to directly broadcast themselves:
“According to The Economist, OnlyFans “users pay a subscription fee to follow and view their favorite content creators. These creators usually charge fans around £5-15 per month, plus more Additional cost.”
From a business perspective, additional features are interesting. Fans don’t spend money to watch; instead, they pay for idol’s personalized messages, videos that mention their names, and comments on what happens next.
This is not a passive behavior of mass consumption; it is a relationship. As an anonymous analyst said, OnlyFans provides “a middle ground between porn and girlfriend.” Like Starbucks, OnlyFans is the third place, between the business and the family. You paid for the coffee, but someone took the trouble to write your name on it and called you when the coffee was ready. “
The commodification of trust has contributed to the separation of personal relationships. People do not seek “natural” companionship or full-service prostitutes (or both), but mix and match the necessary ingredients and pay only for what they want to consume.
However, although users no longer need to trust each other, they still must trust the platform itself. This situation is about to change, and it will have an impact on many different professions and society as a whole.
New online urbanism
The evolution of the network echoes the evolution of industrial cities. Both bring together a large number of people, reduce transaction costs, and achieve a better match between supply and demand. Both enable people to make money in new ways, change the distribution of economic returns, and promote the transformation of interpersonal communication into commercial transactions.
The current state of the network is like a city without public space. People can only interact in places owned by others, and a small group of landlords account for a huge share of all economic activities.
Cryptocurrency offers another option. Most people think of Bitcoin when they hear the word encryption. They thought of trading and speculation, “digital gold” and so on. But the more interesting aspects of cryptocurrency are those that are abstract and difficult to explain: the infrastructure on which the currency operates and how applications that have nothing to do with trading or speculation use that infrastructure. This infrastructure is still young and relatively unproven. But it is fascinating and provides a glimpse into a possible future-even if the future may eventually rely on completely different technologies to achieve the same goal.
In our discussion, let me highlight five related functions that distinguish between blockchain-based networks (also known as Web3) and networks as we currently know them (Web 2.0):
- Decentralized applications instead of private platforms
- Stakeholders instead of users
- Transparent rather than opaque governance
- Pseudonym instead of personal information
- Programmable rather than uncertain results
I’m writing a longer article with a realistic explanation of key concepts related to blockchain and cryptocurrency (by the way, if you want to help with this, please email me). At present, the following five parts give a brief description of the above functions. If you do not need these explanations or want to understand the results before understanding the mechanism, please skip directly to the token society section below .
Decentralized applications instead of private platforms
Blockchain provides a decentralized method for software development. The blockchain is not a central entity that controls all code, files, and user data, but runs on a network of computers controlled by thousands (or millions) of entities. These entities cooperate based on a pre-set agreement, and the agreement itself can be changed according to the agreement between the participants.
Let’s take music download as an example. Both Napster and iTunes allow users to download music to their computers. But iTunes is completely controlled by Apple, and Napster just allows individuals to share files without storing these files on a central server. (Yes, I know Napster is illegal, but our interest lies in the infrastructure, not the company’s ultimate purpose of using it)
Blockchain enables many other services to be delivered in this way, thereby taking this logic to a new level-and the degree of centralization is even lower than that of Napster. There are now blockchain-based social networks, blog platforms, e-commerce systems, file storage providers, music streaming services, currency exchanges, savings accounts, computer games, and more. The services they provide are comparable to those provided by Facebook, Substack, Shopify, Google Drive, Spotify, Epic Games and Bank of America. Nevertheless, they still adopt completely different ownership and governance structures.
Stakeholders, not users
People who use decentralized applications can—and sometimes must—own part of the platform. This ownership takes the form of coins or tokens. They can be used to access specific services, verify personal identity, earn “bonuses”, participate in ongoing review and supervision activities, and vote on changes to the rules of the management platform (or application protocol).
The above content reminds me of shareholders of listed companies, but there are some key differences. The vast majority of Apple or Facebook users are not shareholders of these companies. Customers of these companies do not need to own stocks to use the iPhone or post content on Facebook. In a blockchain-based application, it is usually impossible for the user to not be the owner. Paying for a product means owning its rights.
This ownership structure unifies the incentives of all users in a completely different way from traditional companies. Each user binds his own economic interests to the success of the platform. The most engaged users tend to have more direct power over the management of the platform. I use the word direct because influencers on Facebook have the indirect ability to call the company to make changes to the platform, but they have no direct control over what the company ultimately does. (No, the token economy is not a new form of socialism that solves income inequality—although it may also do so; it may also create new forms of inequality)
In addition to community governance, blockchain technology also enables individuals to sell economic benefits for their own well-being. People can easily issue tokens so that others can share their future income, invest in their education, and vote on how they spend their time. Some people are already doing this.
Transparent rather than opaque governance
The structure of decentralized applications prevents any individual entity from completely controlling or making ad hoc decisions.
Facebook and even Mark Zuckerberg himself have the right to ban specific users and groups on Facebook. 2.85 billion users were exposed to a whim of a person or company.
In contrast, blockchain-based social networks will operate according to pre-programmed rules, enabling anyone who obeys these rules to participate. Any changes to these rules require the consent of multiple stakeholders, and the process of implementing this change is transparent. Once agreed, the changes will be universally applicable and affect everyone in the same way.
Since users usually have voting rights and more people participate in governance discussions, you do not need to be a major shareholder to hear your voice. The open source nature of blockchain projects allows anyone to view and discuss the source code.
These mechanisms are not perfect and can still be manipulated and destroyed. But they are different from the mechanisms that govern our current Internet giants.
Pseudonym instead of personal information
The user of a decentralized application has a public key (similar to a username) that can be used in multiple applications and services. Each public key is associated with a private key (similar to a password), which is used to verify the identity of the user. These two keys decrypt and encrypt each other, and by doing so, verify each other’s authenticity. The application itself does not store the user’s private key (password).
This solution is theoretically more secure than storing all users’ passwords in a central location controlled by a private company. More importantly, this means that the basic unit of identity is the public key, not the user’s email address, phone number, or other personal identification details. Decentralized applications enable two people to trust each other and conduct business without knowing each other’s identities.
Note that this is different from someone who has an account on Amazon that uses a nickname instead of a real name. In our example, the e-commerce platform itself does not know the real name of the seller or buyer. Moreover, as mentioned above, the ownership and management of the platform itself is different from that of traditional companies.
Contrary to popular belief, this does not make blockchain-based platforms ideal for criminals. If necessary, the public key can still be traced back to the user’s real identity. But the normal operation of decentralized applications allows users to trust each other without sharing and storing their personal information with a central private company.
Programmable rather than uncertain results
Blockchain-based applications are managed by code rather than people. Their users are stakeholders with trusted identities. This promotes the development of new ways to conduct business and build products.
To give an example: my friend Packy wrote an article and cited many other writers (including me). Then he sold that article as a digital product. Everyone cited in the article will automatically receive a sum of money from the sale. One day, if the new owner of the article sells it at a higher price, Packy and all contributors can share the profit.
You might be wondering what the big deal is. Isn’t this similar to music royalties that have existed for decades?
Unlike music royalties, the rights of different contributors are incorporated into the transaction itself. The fact that someone paid for the article automatically triggers payment to all contributors, and any future sales can do so. No lawyers, judges, police, bankers, and the “American Association of Composers, Writers and Publishers” are required to complete this transaction. Compliance has been integrated into the transaction itself.
This process is much cheaper than figuring out who gets paid every time a song is played on the radio. And all relevant personnel get paid immediately, instead of getting paid a few months after all intermediaries have completed their work.
By reducing monitoring and enforcement costs, royalties and micropayments can be applied to many other products and industries, not just songs by famous artists. Suddenly, we can compensate people for special contributions to other types of tasks and projects.
I have listed five features that distinguish the web as we know it (Web 2.0) from the alternatives provided by blockchain-powered applications (Web3). If the above content is too abstract, please continue to focus on longer articles that will explain the topic in detail. For today’s discussion, it is important that Web3 has the potential to reduce the current cost of online interactions in the following ways:
- Limit the accumulation of power and economic benefits in the hands of a few companies;
- Authorize users to influence how the platform is governed and participate in value creation;
- Enable users to conduct transactions without damaging their personal information or entrusting them to powerful intermediaries;
- There is no need to rely on expensive middlemen and time-consuming processes to directly and automatically compensate people for the smallest contributions.
The city made possible industrial division of labor and new occupations such as quatorzième. Web 2.0 has enabled the sharing economy and a new generation of influencers. Web3 will make possible the financialization of all human activities.
To explain what I mean, let’s go back to Tönnies. The city pushes human beings from the relationship between “natural” and “spontaneous” to the interaction of non-personal rational construction. Food, shelter, advice, and other comforts or assistance that were previously resolved by the church, family, or neighbors are now resolved by for-profit service providers or government bureaucracies.
The Internet enables suppliers to provide more professional services and enables customers to mix and match these services at will, thereby further driving these dynamics. Increasingly, “suppliers” and “customers” refer to “individuals” who sell their time and attention to each other.
In some corners of the Internet, every human eye, every sentence, and every emotional expression has been sold to the highest bidder. But this process is still cumbersome, requiring users to take the risk of personal information and pay for the maintenance of large private intermediaries. This is why-like all new technologies-it currently only satisfies the strongest impulses of mankind.
Web3 promises to simplify this process, making it easier for more people to trust each other and directly conduct smaller and smaller transactions. As a result, more actions, help, and speech will be dominated by market mechanisms. Some will pay on demand. Others will be bundled and automated in new ways.
Imagine paying a monthly fee to ensure that everyone you see greets you. Or let your neighbor earn a fixed amount every time you turn down the volume, so you can sleep well at night (your sleep tracker will automatically trigger a smart contract to compensate the neighbor every morning; there is no need to really talk to him or say thank you you). I will leave it to your imagination to come up with other possibilities.
Every act of kindness will become a commercial act. Is this a nightmare or a dream society?
I have no idea. But it may not be much different from the world we already know. Tönnies describes smaller rural communities as a relationship between “natural” and “spontaneous”. But are they? The emergence of religion and social systems is not due to an abstract, benevolent instinct; they appear to satisfy economic and political needs. Humans always get along well because they need something. They have been trading and experimenting with different incentive plans.
Web3 is just another step forward. It will produce new systems and social structures to meet human needs for safety, love, sense of belonging, recognition and self-realization. We should not assume that our current institutions are the best that mankind can do. What happens next depends on us.
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