The internet has been a place of innovation and experimentation since it began in the early 60s. Since then there have been several iterations of what we call the world wide web. Beginning with simple text only websites to a technology that has weaved its way into our everyday lives, offering communication, entertainment, education and more.
As much as it has become a part of our lives many of us haven’t stopped to think about how the economy of the internet operates and what role we play in it. What started out as a world wide web, open to all and a way to democratize information has become a space where a handful of companies control a majority of the attention and revenue generation. The largest internet platforms manipulate and exploit their most valuable contributors: you the user.
The top 3 websites by monthly visits outpace the next 47 websites combined.
Google: 92.5 billion
Youtube: 34.6 billion
Facebook: 25.5 billion
Source: https://www.visualcapitalist.com/the-50-most-visited-websites-in-the-world/
This misaligned connection between the user and platform means users have no voice in the services they contribute to, content created is not owned by the creators and contributors receive no share of revenue generated.
As more individuals begin to question the operation and decisions of large internet platforms, a shift in behavior and advancement in technology has opened up a new model of operation between platforms and users. Known as web3, where users become owners. An ownership economy.
What is an ownership economy?
Through leveraging blockchain technology the next iteration of the internet is coming to light, where products and services turn users into owners. The transformation of an internet owned by large institutions into an open network where participants have a stake in the platforms and are rewarded for doing so.
Ownership can take many forms including NFTs, HODLing tokens and governance tokens. Each a unique way to participate in the ownership economy.
NFTs
Non-fungible tokens are at the core of the ownership economy. Digital assets that can take the form of any digital media. The invention of NFTs has allowed creators to own the content they produce fully and outright. Making it possible to monetize, connect and distribute in whole new ways. For a more in depth look at NFTs Read more here - NFTs - disrupting technology or hype?.
HODLing
A passive way of ownership. HODLing(holding tokens) means you are contributing to the operation of the network. Some blockchains utilize token mechanisms that incentivize behavior. By holding tokens you become a part owner of the network and receive compensation through token price appreciation or rewards for securing the network.
Governance Tokens
Tokens that give you the ability to vote and take part in the operations of the platform. As a governance token holder you can vote on decisions that influence the network.
DAOs
Decentralized Autonomous Organization(DAO) operate similar to how a normal brick and mortar business would except the business decisions and operations are governed through a shared set of rules enforced by blockchain based smart contracts. This offers global accessibility, transparency and a lower barrier to entry. Being part of a DAO permits access to the organization often through a form of governance token.
Through each of these methods individuals have a way to economically and ideologically align with the products and services that they use. Creating a new dynamic where the users have a stake in the ongoing success of the platform.
Effects of the ownership economy
While still in the early stages of what could be a transformative shift in power. There have already been several cases where the ownership economy has impacted how platforms operate.
Increased user Loyalty
User retention is key when it comes to a growing platform. There needs to be a reason why people stay and participate. When users become owners they are more inclined to continue using the product. Through token distribution mechanisms users can be incentivized to remain in the network. Some examples of this are veTokens, game-fi and DeFi yields.
veTokens - Lock up tokens for a certain period of time in order to receive network incentives. Those that lock-up tokens believe in the future success of the platform and therefore are rewarded.
More on veTokens https://bowtiedisland.com/vote-escrowed-tokens-vetoken-the-good-the-bad-the-ugly/
Game-Fi - Platforms like Axie https://axieinfinity.com/ take the digital collectables approach to retain users. A game created where you use your digital assets to battle others. Users are rewarded with tokens and experience perks in a video game environment.
DeFi - Multiple DeFi platforms offer high-yields to attract users to their platforms. By having stable and market leading rates users are more inclined to stay with your product as well as provide liquidity.
Enhanced Ecosystems
What happens when you have a low barrier to entry and distributed ownership? A shared interest in the success of the platform creates a community of users and developers aligned towards growth and adoption. Take Ethereum for example which has a massive contributor base who are all incentivized by the value of their stake in Ethereum, their Ether. This incentive magnifies the network effects which has created an ecosystem spanning marketplaces, DeFi, social, game-fi and more. As the ecosystem gets bigger this reinforces the disincentive to leave or switch platforms.
Ethereum
2021
Total Address: 198.1 million
dApps(decentralized applications): 2000+
Bootstrap Funding
As an alternative to venture capital funding, networks are giving shared ownership in the form of tokens. This way of funding means platforms can bootstrap initial adoption and get off the ground quicker than traditional ways. Having a user base right from the beginning also fosters a community with incentive to participate in the new platform of which they own a part of.
Not perfect by any means and there are potential pitfalls that need to be worked out. Simply because you distribute ownership doesn't mean automatic success. There needs to be a product worth using as well as a team capable of delivering.
In Conclusion
The ownership economy opens up novel ways of interaction between individuals and the services they use. Giving equity to participants where you are being compensated for your contributions, and not the platform. A web that incentivizes participation and aligns users with the success of the platform creates a positive environment for both sides.
Although this is a new development in the internet space there is potential for its mass adoption. Who knows perhaps this is the way future internet giants could operate.
Thanks for reading!
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