Of late, Raoul Pal is talking about communities and the power they will have in the future. The basic premise is that communities are going to be the foundation of most things as it relates to business. The idea of tokenization allows for different business structures such as the DAO (decentralized autonomous organization). This creates an alternative model to what we are accustomed to seeing.
Instead of having users or subscribers, businesses will be a community. This takes on a new meaning as it reduces the adversarial differences that seem to exist between the two sides presently. It aligns the goals of each member in a way that all can benefit. If it is a relationship that is not working for one, it is rather simply to leave. Selling one's stake in a liquid market is fast as well as inexpensive.
What is the benefit of tokenizing a community? Why would anyone go through the process?
We need to look passed the financial aspect of things. As stated repeatedly, this is just first generation stuff. When we look deeper at the issue, we see a great deal more taking place.
Basically, tokenization allows for incentivization. Those designing a token are able to establish certain codes of conduct that they want to reward. At the same time, there are also those they want to deter. A token allows for this to take place.
Of course, the dream is that all contribute towards the forward progress of the community. The reality is that not everyone does so in an even manner. Simply put, some will do a lot more than others. Pareto's Principle, also known as the 80/20 rule, enters the picture.
Thus, tokenization allows for the rewarding of people in proportion to what they contribute. While it is not exact, the likelihood is that those who are bigger participants will utilize the incentives whereas those who are sporadic will receive less.
Cryptocurrency is reinventing the way people organize. The DAO is a prime example of how this is going to occur.
When looking at corporate structures, we see the hierarchical model typically followed. This was the case for the last 150 years or so. Under this system, those at the top make the decisions and control the direction of the company.
Or do they?
This is something that is possible in an organization of 20 or perhaps 50 people. However, when the organization is 10,000 people, those at the top develop the framework the organization operates within. In other words, it sets out in a direction. Yet how the end is reached is really up to the thousands of other people. The few really cannot steer things exactly as they want.
Of course, this is evident in the twists and turns that large organizations take. How often do they start in one direction only to end up in a completely different business?
Entities of this size are complex systems that become living entities. Thus their centralized structure ends up operating in a decentralized manner. The lower levels of authority, while diminishing on a relative basis, end up being larger in total since there are more people and they tend to be closer to the frontlines of the business.
DAOs bring an entirely new mindset to this concept. There is no "top" in the traditional sense. Here we see smaller neighborhoods of people within the ecosystem, all doing what they want to focus upon. We actually end up with a similar course of action minus the direction from the top. Instead, we get a community driven initiative that can operate in a "chaotic" fashion. Yet, out of the chaos is actually a systemic plan that unfolds.
Ultimately what results is digital neighborhoods that people are involved with. This is something that is done on a voluntary basis. In the future, as the infrastructure is built out, people will enter and exit rather easy.
Many believe this will end up creating greater localization. Essentially we will erect billions of "local" communities on top of this global infrastructure. Of course, local does not equate to geography. People are still going to be located all over the world.
The core thread that is going to unite people in these communities is what gives them meaning. This is where the idea of solely looking at the financial end of things is easily upended. It is true that money gives things a certain amount of meaning. However, most would agree that it is shallow at best.
What will end up unfolding is the ability for people to spend their time engaging upon what is important to them. Whatever that individual derives meaning from, a community will form around it. This is because if one has it, others will also.
Community Is The Starting Point
This is a radically new concept, especially in the digital world.
Presently, we operate with the "build it and we hope they come". This is the entire basis of the venture capital world. Under this system, a person (or group of individuals) comes up with an idea, they build something out, and the idea is to construct a community around it. Ultimately, the VCs then want that community monetized so that it can provide a return.
This model is being turned upside down.
In the future, we will see communities forming first. There will be a group of people who assemble around something that is meaningful to them. From there, they will develop the projects that satisfy their needs and pull in more people of similar interest. Over time, this becomes a self-feeding idea whereby the project keeps expanding and growing in relation to the community.
This will end up increasing the impact the community has. Certainly, it could be reflected in the financial sense but there could be more to it. Whatever is at the core for that community, that can be expressed. With thousands of different members, all incentivized to engage in certain behaviors, the benefits in that realm could be enormous.
Eventually, through the tokenization process, an entire economy could emerge based around the meaning that brings the people together. Here we see where the localization re-enters the picture. Commercial activities can arise as the members of the community innovate and create. Simply put, more ways to engage arise which can have a commercial impact.
We prefer to buy from those we know and trust. This was lost over the years as globalization and corporatocracy took over. However, with cryptocurrency, it is already re-emerging. We can see how reputation within one's community is vital. This need not be automated. Rather, it all comes down to the trust people have with each other. Some will stand out as being exceptional in this area whereas others will fall short. The "respected tribal elder" could make a comeback.
What is interesting is that Hive is already operating in this manner. We see the ability to form a community at the base layer. It is inherent in the system. This is going to open up a host of different possibilities as more of the infrastructure gets built out.
Once this happens, we will see a lot of experimentation occurring. This will present us with innovative ways of organizing and building out new structures. As we break things down to smaller units of activity, each person's impact becomes that much greater. Of course, those who step back can see the totality of the impact on a bigger scale.
Cryptocurrency offers a seamless way to tie a lot of this together. The tokenization process of communities is a powerful mechanism, one we really have not started to really utilize to a great degree. Over the next few years, this will become more evident in our daily lives as the union between the physical and digital takes place. The advantage to the later is we do not have to deal with physical space requirements (damn physics). Instead, we can utilize the timeless, near limitless nature of the digital world.
This will likely result in a massive explosion of innovation, leading to greater impact on a per person basis. For now, we are seeing a lot of infrastructure being put in place. As more tools become available, the ingenuity of humans can be leveraged for rapid gains.
Few are considering how close this really is. We are not all that far away.
Actually, many on Hive are already aware of it since we live it on a daily basis. We see how powerful some of the communities can be and the impact one individual can have on a small "tribe".
When implemented on a global scale, this will be transformative.
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