Distributed Token Economy Explained

With the ongoing revolution in information technology, our economic systems of organization are being transformed and disrupted by the rise of information networks. It started with the advent of the personal computer, World Wide Web and with the rise of online platforms the disruptive power of information networks to reshape economic organization became ever more apparent. Today this process of economic transformation continues with a new set of technologies as we are currently in the process of remaking the technology stack of the internet; building what is called web 3.0 a primary component of which is the Blockchain.

The defining feature of this next stage of economic development is that it decentralizes our economy and shifts operations to global information based networks like never before. This distributed internet technology stack that is currently being built enables a network of computers to maintain a collective database of value ownership and exchanges via internet protocols. This bookkeeping is neither closed nor the control of one party, rather, it is public and available in one digital ledger which is distributed across the network. The most mature example of this is what we call the Blockchain. In the Blockchain, all transactions are logged including information on the date, time, participants and amount of every single transaction. On the basis of sophisticated mathematical principles, the transactions are verified by the so-called “miners” who run the computing infrastructure required to maintain the ledgers.

The technology of Web 3.0 enables a new form of decentralized economy as it removes the dependency on a centralized authority for managing the network, instead replacing it with a distributed consensus model managed by many. This shared securely encrypted database enable trustless peer-to-peer interactions via new internet protocols. People can begin to set up their own networks for coordination and direct exchanges of value peer-to-peer and it enables the rules of these transactions to be automated in new ways.