Crypto’s new Face. Book your spot for the meteor night
What if the virtual economies of a Farmville or a Second Life would not be just for play? If crypto powers native money inside social platforms, it can spell both ‘money’ and ‘platform’ in a new way
The fun of playing Monopoly is, well, in the idea of money. Not money, per se.
It has been, albeit, long since we saw anything game-changing in the real world of money out there. Wait, what is the real world today, anyway in an age where everyone (thankfully, almost) is hunched over a phone or neck-deep in an app busy liking, trolling, patting, brick-hurling or simply stalking something or someone digital? In an era where we prefer walled gardens to real ones, where Instagram usurps attention from the real sunset, where deep-fakes are no more figments of Federico Fellini’s world – it was about time that someone thought of in-app money.
But Money. Huh.
'Money has always been something of an embarrassment to economic theory'.
Long back, in a Harvard report in the Quarterly Journal of Economics ‘A Walrasian Theory of Money and Barter’, Abhijit V Banerjee and Eric S Maskin mentioned without mincing any words – ‘Everyone agrees that it is important; indeed, much of macroeconomic policy discussion makes no sense without reference to money. Yet, for the most part, the theory fails to provide a good account for it. Indeed, in the best-developed model of a competitive economy-the Arrow-Debreu [1954] framework, there is no role for money at all. Rather than there being a medium of exchange, prices are quoted in terms of a fictitious unit of account, agents trade at those prices, and that is the end of the story.’
Nothing can be more surreal than the idea of a Facebook coin for payments within WhatsApp or Instagram or the arrival of a GRAM (inside Telegram). Yet here we are relishing rumours of in-platform money being minted by our most loved platforms. These hints are like meteors - full of excitement but nowhere in plain sight.
Recent reports of Facebook acquiring Libra trademark add more than fresh grist to these rumour mills. These reports generate well-timed intrigue, as do attempts like VK Coin from the Russian counterpart of Facebook – Vkontakte, that make it plausible for users to transfer and withdraw money, pay for food, cab, electricity etc. through in-app money.
The cryptocurrency, VKcoin (VK) had, presumably, some four million new users ‘mining’ the coin in a short span of the coin’s launch. VK Pay has been, confidently-thus, touted as a convenient payment for goods and services in VKontakte communities and online stores.
Telegram users are also awaiting their own currency with all the anticipation around GRAM and TON. The question, inevitably, is not whether such native money models will be well-received or not. The question is why and how.
Brains love Rewards. Blockchain can redefine the reward mechanism with transparency and structure
The Child Inside Liveth
Perhaps, our brains are still deeply and stubbornly wired for rewards. Sudheer Hullemane, Head, Product and Technology, Futur Innovative Technologies, that is is busy building new-age, niche products (and IP in blockchain and AI) takes us back to the original psychology that is driving the success of any social platform today – Rewards. He cites how the reward mechanism for good posts is the very radical idea behind their first-born - Murmur the blockchain-based, decentralized microblogging platform that is open, transparent and allows users to monetize their content. “The whole concept of likes, comments, tags etc. is that someone is rewarding a user. That makes us addicted to any platform. The reward for the mind. There is no unit value to that. Most people’s brains love the fillip they get from recognition or a reward – no matter tangible or intangible.”
He reasons that is the psychological oil that is fuelling most social networks – making brains feel happy. But the current challenge is to complete the tree. “YouTube started monetising the first 100 likes, or comments etc. on a small scale. But a blockchain can redefine the reward mechanism and create a solid model that throbs with transparency and structure. Yes, there is a lot of potentials for networks to tap blockchain and what rewards they choose would be any network’s own model for it. Ex- A cab-app like Uber can convert good reviews into bonus points or miles-rewards.”
Will You? Won’t You?
Able Joseph, the founder, CEO, Aisle, a radical dating and social networking platform for more meaningful connections, reckons that any organisation adopting crypto is great news. But he brings in a furrow. “If it’s centralised and the organization has a history of censoring certain voices, I would be concerned.”
As to whether a platform like Aisle would ever be open to crypto, he shares, “Once/if cryptocurrency is mainstream all app developers will tokenize their communities, including Aisle.”
Semyon Germanovich, Founder of Crypto Exchange Voltaire in the UK that recently came up with the proposition of rewarding users with Voltaire CashBack scheme, is strongly sceptical about the Facebook-coin news but he does put a twist in the way we look at the idea. “If Facebook introduced an in-network coin, there would be no purpose to use a Blockchain. What would be more interesting is if Facebook integrated an existing cryptocurrency to allow users to make payments directly. Adoption would skyrocket.”
Spoiler-Alert
Do you know that even if no money is exchanged, barter is still considered taxable by the IRS?
Well, that is just one wrinkle that social crypto would probably need to iron out. Can you convert crypto-pennies from one platform to another? Would it be easy for others to know what are you doing with this money (provided, you do not want them to – which itself is rare, given the desperation with which social network users broadcast their whereabouts)? Can this new stripe of money help crypto-industry with an expanded ecosystem?
The concept can be a game-changer and yet there are areas like fungibility, privacy, real utility and network effect, not to forget regulatory hurdles, which could create a wrench or too as these wheels pick speed. Joseph feels that models such as that of Steemit should see a lot more adoption. He points out government policies as a factor to consider too. “We need lawmakers who champion freedom and liberty for crypto to reach its potential. Wonder who might that be.”
Sudheer, however, wonders how well, or soon, would multiple crypto-currencies co-exist beyond these networks. That is something that the experts and regulatory mechanisms will have to figure out, he opines, calling ‘conversion’ as a future multiplier. “But the transparency, accuracy, authenticity and traceability that blockchain allows is simply disruptive.”
Until we actually see a comment or a review or a tap getting monetized and traded inside/across social platforms, it is hard to say whether these social coins would be an embarrassment or a thrilling 'roll of dice' that will change the playground as we know it.
In a world where hyperinflation has already pushed Venezuelans to the brink of swapping fish for flour and rice, can cryptocurrency be the doorknob to a new-old world of barter-economy?
Maybe the next edition of Monopoly would not be about hotels, properties, bankruptcy and Game of Thrones. Maybe it will be about crypto tokens. ‘Like’ that?
Posted from my blog with SteemPress : https://coinatory.com/2019/05/10/cryptos-new-face-book-your-spot-for-the-meteor-night/