Over the past two decades, we've been industrious little beavers, constructing vast networks all over the internet. Think of platforms like Instagram, Twitter, YouTube, and Discord. They're colossal networks, which can be whittled down into billions of tinier networks, composed of followers, friends, subscribers, backers, and the like.
These platforms gifted many a voice who previously went unheard. However, due to fundamental disparities between the networks and their corporate overlords, we've seen an uptick in friction around the networks' rules and economies.
Case in point, social media behemoths controlling large networks regularly squash promising 3rd-party developers underfoot, wage war against cross-network interoperability, levy exorbitant take rates, and employ invasive advertising models.
It's not because they're the internet's version of Disney villains. It's just the nature of the beast. If they didn't resort to these tactics, their competition would, and they'd be yesterday's news. I've delved deeper into this topic here.
But we stand on the brink of a new internet age — Web 3 — where we can morph these networks into economies, creating systems where the incentives of network owners, participants, and third-party developers are in perfect harmony.
These 'economies' we're talking about? They're networks brimming with crypto assets, zipping from node to node, directed by the decentralized participants instead of the central network owner.
Why the focus on crypto? Sure, you could theoretically have digital economies without crypto, but crypto assures authentic ownership of goods (NFTs) and currency (tokens), thus reducing switching costs and thwarting networks from resorting to Web 2 shenanigans like retiring APIs and hiking take rates.
Web 2 networks are tight-fisted when it comes to commerce, allowing only limited transactions with centrally dictated prices, products, and buyer-seller relationships. Thanks to user lock-in, Web 2 take rates are through the roof.
A genuine digital economy is akin to a bustling marketplace. Anyone can conjure up new goods and services and is free to trade with everyone else. People can flex their creative muscles and reap the economic rewards of their creations.
To get a sneak peek of what new economies built atop existing networks might look like, we can turn to blossoming NFT communities, like CryptoPunks, that span across platforms like Discord, Twitter, Telegram, OpenSea, and Larva Labs.
In these societies, CryptoPunks aren't "mere jpegs". They're cultural talismans, drawing value from the collective myths, memes, stories, and experiences of their community.
Now imagine this concept applied to, say, a band that's spent years amassing a fanbase but currently earns just nickels and dimes from streaming services. With tokens and NFTs, the band can turbocharge their network into an economy.
The goods circulating in the band's economy could be social tokens, digital art, collectibles, tickets, game items, exclusive experiences, or any other ingenious thing creators and technologists concoct (we're still in the early days—there's bound to be more brilliance ahead).
The band would profit from primary issuances, resale cuts, possibly owning a handful of fungible tokens, and would be motivated alongside the community to amplify the economy. Got a bright idea? You're more than welcome to contribute or build on top.
These economies will be composable, allowing new ones to be erected on the shoulders of existing ones. Systems and services become akin to Lego blocks, fueling everyone's progress. Admire what another economy achieved? No need for rivalry. Build your own economy alongside it.
Economies that evolve organically, from the ground up, end up resembling cities.