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To me the two most provocative points made in this essay are that tokens could be used to fund open source projects and that tokens could be used to distribute

by harryh 9y ago

To me the two most provocative points made in this essay are that tokens could be used to fund open source projects and that tokens could be used to distribute some of the value in large successful internet companies like Google & FB to early adopters. I don't see how this would work though. I buy a token for some random open source project (say a unit testing library because they link to one as an example). And then what? Or I buy a token in a new social network that eventually becomes very popular. What does that get me? They don't connect the dots on these ideas at all & I really wish they did. As it is it sounds like they're trying to gloss over something that doesn't really make sense when you try to think it all the way through.

cryptonector 9y ago
Like all currencies and alike, they have to be exchangeable in order to be of any value.
brut 9y ago
You can raise money by crowdsourcing without having to raise a single USD ever, fill forms, go through regulators and banks etc. It's not that you offer redeemable tokens. You just create a token and people buy it. Then you have money. That's how it works for at the moment.
- jerguismi 9y ago
  I'm pretty sure that if you ask the regulators, they will have a different idea on how token crowdsales should be treated. Essentially they are very similar to a shares in a company. In the end when you sell those tokens you get BTC or USD, which pretty much should be treated as money if you ask the government.
  - brut 9y ago
    I was being a bit sarcastic. :)
wmf 9y ago
I think the idea is that people have to spend the tokens to use the network and thus they buy tokens from early adopters. https://coincenter.org/entry/what-are-appcoins https://coincenter.org/entry/what-are-appcoins
- harryh 9y ago
  Ya, I thought of that but that doesn't really make sense to me either. Open source projects tend to be free to use. Under this plan you need a token. Which costs money. That's a big change! Kinda sounds like they're saying that if you change your open source project to a proprietary software project you can get people to pay for it. Now that may be true (for some projects at least) but that's fundamentally changing the nature of what it is you're building.
  - ajmurmann 9y ago
    Something like Golem might fall into this category. It's a project that allows you to use tokens to trade computation time on other people's machines. The software is open source and you could probably set up your own network that uses your own tokens, but likely most users will buy and sell computation at the network the founders set up.
    - harryh 9y ago
      That's different though. That's paying for a service (compute time). Not somehow getting money for an open source software library.
      - ajmurmann 9y ago
        The team got $8.6 million in the initial token sale though. I'm pretty sure they also retained a fair number of tokens. Since there is s fixed amount of tokens the value per token should go up if Golem gets many people to use it and thus the value of the retained tokens rewards the team for their success. A scheme like that of course only would work for a very small portion of open source projects. I could see this work though for pretty much anything that needs hosting. In order to join the network you pay tokens to someone else who is providing that hosting. You could clone pretty much any social network that way. Want to have an account or make changes to your account you gotta pay for the computation.
jerguismi 9y ago
Tokens ban be used to fund anything, including open source projects. However the general trend seems to be that token crowdsales are just used to fund more token crowdsales, as it doesn't really make sense to do the work when you get the money up front.
skybrian 9y ago
I can sort of see it. Let's say you have a Kickstarter and the first 100 people get a ticket to a concert. If you give them an online token that works as a ticket, it's (in theory) more easily transferable, so they could exchange it online. This is a way of creating an online secondary market with little infrastructure. It assumes you want to encourage it. (Unlike many artists who want to discourage scalpers.) You could imagine this sort of thing happening with any other credits, like game currency or frequent flyer miles. Something usable worldwide (unlike concert tickets) would have more value. However, I don't know how many companies who will want to hand out credits that are exchangeable worldwide in this way, since you don't know who your customers are and there is little protection against abuse. It seems like there would be a lot of potential for money laundering as well. But, if you're desperate to raise funds, it gets you money up front (much like Kickstarter) and speculation might result in raising money faster. On the other hand, it might reduce demand due to less "fear of missing out," since people might consider buying it later (much like they buy products on ebay). What would open source projects could give people that they would want to buy? There are games and other product-oriented stuff, but most software isn't in that category. It's ironic that a technology supposedly based on not having to trust anyone relies so much on trust. If the company doesn't deliver on whatever the tokens are supposed to buy, they become worthless.
LrnByTeach 9y ago
> I buy a token for some random open source project (say a unit testing library because they link to one as an example). And then what? > Or I buy a token in a new social network that eventually becomes very popular. What does that get me? very good points, with no clear answers from these Cryptocurrency companies ..
laktek 9y ago
I guess for Open Source projects Tokens can be used as a way to filter support queries (position in the queue determined by the tokens you hold) and give voting rights (who have the power to drive the feature roadmap).

by harryh 9y ago

cryptonector 9y ago

Like all currencies and alike, they have to be exchangeable in order to be of any value.

brut 9y ago

You can raise money by crowdsourcing without having to raise a single USD ever, fill forms, go through regulators and banks etc. It's not that you offer redeemable tokens. You just create a token and people buy it. Then you have money. That's how it works for at the moment.

jerguismi 9y ago
I'm pretty sure that if you ask the regulators, they will have a different idea on how token crowdsales should be treated. Essentially they are very similar to a shares in a company. In the end when you sell those tokens you get BTC or USD, which pretty much should be treated as money if you ask the government.
- brut 9y ago
  I was being a bit sarcastic. :)

wmf 9y ago

I think the idea is that people have to spend the tokens to use the network and thus they buy tokens from early adopters. https://coincenter.org/entry/what-are-appcoins https://coincenter.org/entry/what-are-appcoins

harryh 9y ago
Ya, I thought of that but that doesn't really make sense to me either. Open source projects tend to be free to use. Under this plan you need a token. Which costs money. That's a big change! Kinda sounds like they're saying that if you change your open source project to a proprietary software project you can get people to pay for it. Now that may be true (for some projects at least) but that's fundamentally changing the nature of what it is you're building.
- ajmurmann 9y ago
  Something like Golem might fall into this category. It's a project that allows you to use tokens to trade computation time on other people's machines. The software is open source and you could probably set up your own network that uses your own tokens, but likely most users will buy and sell computation at the network the founders set up.
  - harryh 9y ago
    That's different though. That's paying for a service (compute time). Not somehow getting money for an open source software library.
    - ajmurmann 9y ago
      The team got $8.6 million in the initial token sale though. I'm pretty sure they also retained a fair number of tokens. Since there is s fixed amount of tokens the value per token should go up if Golem gets many people to use it and thus the value of the retained tokens rewards the team for their success. A scheme like that of course only would work for a very small portion of open source projects. I could see this work though for pretty much anything that needs hosting. In order to join the network you pay tokens to someone else who is providing that hosting. You could clone pretty much any social network that way. Want to have an account or make changes to your account you gotta pay for the computation.

jerguismi 9y ago

Tokens ban be used to fund anything, including open source projects. However the general trend seems to be that token crowdsales are just used to fund more token crowdsales, as it doesn't really make sense to do the work when you get the money up front.

skybrian 9y ago

I can sort of see it. Let's say you have a Kickstarter and the first 100 people get a ticket to a concert. If you give them an online token that works as a ticket, it's (in theory) more easily transferable, so they could exchange it online. This is a way of creating an online secondary market with little infrastructure. It assumes you want to encourage it. (Unlike many artists who want to discourage scalpers.) You could imagine this sort of thing happening with any other credits, like game currency or frequent flyer miles. Something usable worldwide (unlike concert tickets) would have more value. However, I don't know how many companies who will want to hand out credits that are exchangeable worldwide in this way, since you don't know who your customers are and there is little protection against abuse. It seems like there would be a lot of potential for money laundering as well. But, if you're desperate to raise funds, it gets you money up front (much like Kickstarter) and speculation might result in raising money faster. On the other hand, it might reduce demand due to less "fear of missing out," since people might consider buying it later (much like they buy products on ebay). What would open source projects could give people that they would want to buy? There are games and other product-oriented stuff, but most software isn't in that category. It's ironic that a technology supposedly based on not having to trust anyone relies so much on trust. If the company doesn't deliver on whatever the tokens are supposed to buy, they become worthless.

LrnByTeach 9y ago

> I buy a token for some random open source project (say a unit testing library because they link to one as an example). And then what? > Or I buy a token in a new social network that eventually becomes very popular. What does that get me? very good points, with no clear answers from these Cryptocurrency companies ..

laktek 9y ago

I guess for Open Source projects Tokens can be used as a way to filter support queries (position in the queue determined by the tokens you hold) and give voting rights (who have the power to drive the feature roadmap).