The future of Blockchain: it’s more and more be seen as an incentive machine.

Capitalism is still seen as the ultimate way for people to work together. But there are other interesting forms, and one of them is the collaborative commons.

Collaborative commons

Commons usually refers to resources accessible to all members of a certain group. In the classical form of the commons, this concerns sharing, for example, food or agricultural land and how you ensure that the commons are properly managed and not depleted, the so-called 'tragedy of the commons'.

To quote Wikipedia:

The tragedy of the commons is a term used in social science to describe a situation in a shared-resource system where individual users acting independently according to their own self-interest behave contrary to the common good of all users by depleting or spoiling that resource through their collective action.

The term first appeared in an essay written in 1833 by the British economist William Forster Lloyd. Today you can see the commons re-emerge in open-source code, in data sharing or in sharing cars and bicycles.

What does that have to do with blockchain?

By making incentives people can act in their own interests, but at the same time defend the common interest. Blockchain is really useful in this as you can reward people with tokens. Because you can make your own coins with specific characteristics, you are therefore in a position to reward people if they display behavior that is in the general interest of your system. In this way you ensure that the individual interest and the collective interest are aligned.

For me, those incentives are the most important part of blockchain, not the smart contracts or the fact that they make trust superfluous.

In a famous article from The Economist blockchain was labeled as a 'trust machine', in the sense that blockchain records transactions without a central actor. According to the traditional vision, this can obviate the need of central actors and allow cooperation between actors who do not trust each other.

However, blockchains are rather slow and log and trust and integrity can be solved perfectly with cryptography, you do not always need blockchain for that. The most important blockchain innovation is thus that you can design incentives through tokens, not that you can solve trust issues. 

Like I said here before in a reply to the question if blockchain could be applied to fact-checking: In the event that data is registered in the blockchain, the blockchain network can not verify the correctness of this data, unless all data for that verification is already on the blockchain.

A blockchain network can thus verify whether a Bitcoin transaction is valid, but does not know whether your marriage contract or a diploma registered on the blockchain is actually correct, valid or true. Suppose a smart contract automatically pays you an amount if your flight is delayed, then information about the flights must be provided to the smart contract. The smart contract cannot verify whether the supplied information is correct. Incorrect input thus results in erroneous output. A blockchain is not necessarily a source of truth, as it is sometimes, somewhat religiously, expressed.

You could say that blockchain is increasingly be seen as an 'incentive machine'.

For the time being, blockchain cannot replace existing systems

The fierce price corrections of the past year creates an externally boring phase in the crypto market. The hype seems over. It is still difficult to predict what crypto prices will do and many companies are discarding their blockchain experiments. In the Netherlands, chocolate producer Tony Chocolonely, for example, stopped a blockchain project to trace chocolate through their chain, for the simple reason that ordinary technology works better for that. (by the way, they produce amazing chocolate products!)

You notice that blockchain is still a very young market. For the time being, there are few systems in the blockchain world that are mature enough to replace an existing system. Blockchain is experimental and often you do not need a blockchain but simply cryptography. What blockchain does do is create new types of economies, such as the CryptoKitties. But those are curiosities, and that certainly does not go to enterprise level.

Change is on the way

For the time being we have seen almost all hypes. Five years ago we thought Bitcoin would change the world, afterwards the crypto coins had to make way for blockchains, and then consortia, and then smart contracts, and now we look at incentives. The volatility of this shows how experimental it still is. Maybe we will ultimately end up at the collaborative commons, with platforms where people can really work together and be rewarded for this.

We already see these burgeoning commons in the way the blockchain community works together. Codes, ideas and notes are shared. Perhaps the open-source and blockchain community is already the beginning of a sort of commons. There are no patents nor trade secrets. That open source method shows that change is on the way!

#blockchain #crypto #data #sharing #freedom