Identity, ownership & web3

So let's talk about the Token Economy. This is made possible by blockchain of course and represents the third generation of the internet. I love the chart below from Robert Aronovici so lets start from there.

Going back to 1994 we have the first generation of the internet. That is the worldwide web. Here we can merely read data from a website. There is no provision for identity. You are just a subsriber to a web site. You are a client. You are not a full member of the internet, as Charlie Northrup might say.

Dial forward to 2004 or so and we have web 2.0. Here as well as the ability to read data from a website, you can also write data to the internet such as on sites like youtube and Facebook. But from an identity perspective you are now even worse off than before. The temptation is to use your Facebook credentials to establish your identity on the internet. This sets you well on the path to being a digital serf to your Facebook overlord.

Dial forward to 2014, with the birth of blockchain, and onto today with the birth of the Token Economy. Here, as well as the ability to read data & write data to the internet such as on sites like youtube and Facebook, you can also own data, including and especially your identity, on blockchain networks. This is a huge deal as you claw your way back from becoming a digital serf and instead become a full member of the internet. And that member could be a person, you or me, a company or an intelligent thing (IoT) like the EV charger for your car. Anything that can own a credential. And there are a ton of credentials I can own attached to my identity, like my skills or health status. Now it is well worth repeating this again. You own and therefore govern your own identity and associated digital assets on the internet. You are now a full member of the internet.

It's my damn data

Token economy - in web3 I own my identity and digital assets. By extension I own my super valuable health data as an extension to my identity. I have MS and if I choose to share my data with a health digital ecosystem then that is my choice and no GDPR or politician can stop me. Let me tell you I waited months to see a consultant and in despair went privately and that private consultant had no access to my data - 3 years of MRI’s, needle tests, spine samples - we had 30 mins and I had to tell him what I could remember of my test results.

No more in web3. I have my MS token in my wallet and I give access as I see it. It’s my damm data - do you get that you healthcare professionals out there!!

It's pretty hard to explain web 3

Token economy - what is it? Folks get REALLY frustrated if you talk in abstract terms. They want real examples. We are talking about the 3rd version of the internet from web 1 (read), web 2 (read/write) and web 3 (read,write,own)

Back in 1994 it was damn hard to explain “read”. Who could have predicted “write” to Facebook? Yet alone explain what a social media account was. And today trying to explain “own” to all those folk out there feels just like this clip from "The Today Show - What is the Internet, Anyway?" ...

So how do I explain web3? Well think of my situation with that MS consultant. Well, I have my MS token in my wallet and I give access as I see it. Now it's not quite as simple as that as we can think of blockchains as being "economies in code." Yes, blockchain evolves into the token economy of win-win-win outcomes. Therefore economic incentives will be designed to give fair and democratic outcomes to all economic actors on the ecosystem including the tax payer. A blockchain is an economy in code driving greater value through collaboration for everyone in a fair and democratic way. Therefore I or my insurer may need to trade value to the NHS in order to achieve this data sharing. But I have those incentive and health market place tokens in my wallet so I can transfer value and (access to) my owned data at exactly the same time. I have executed a trade. Not in this case in ownership of my data or digital assets but rather in access to my data. Execute a transaction, in an anything to anything model. This is where an autonomous economic agent (smart contract) does the heavy lifting for me, so I, as Joe Public don't have to worry about how to govern my data. I let that autonomous agent do that for me once I have given my consent. Maybe I share only insights derived from my data, and the data itself stays private and never moves.

But how do I do that? How do I give my consent? What will be the user experience in web 3 rather than web 2? Well let's listen to Keir to find out about that.

Ah, right. So this web3 is about changing the back-end of how valuable stuff (my health records) are stored and accessed on the internet, rather than a front-end change. Now I hear you say, "but what if I screw up? Who is going to help me out?" Well first of all, the web3 comes with rights and duties.

Token economy - ownership and management of your data on the internet brings rights and duties.

--> Rights - it's my damn data to govern and monetise as a full member of the internet

--> Duties - I am part of a democratic community & must participate in community decisions as a full member of the internet

But secondly we do need to help that Joe public user out as my friend Korbinian reminds me. Being a full member of the internet brings a level of responsibility and duties that may be too much for the average Joe - we need an extra layer in here for recovery protection if you screw your wallet up. Well, "when" rather than "if". And as my friend Kevin Yavuz says " the avg user would need back-up mechanism. But I am not concerned, it’s a question of time and level of need until a solution will come up. Crazy idea: I can imagine it could be something biological you can’t change like iris / DNA you could use a last resort to get your private keys which are locked…"

So you see identity and ownership are a big thing in web3!

If you want to learn more about this thinking you can read or reference my whitepaper about all of this?which is published on SSRN.

Suggested Citation: "Martin, Andy, The Token Economy (October 16, 2021). Available at SSRN:?https://ssrn.com/abstract=3972111?or?https://dx.doi.org/10.2139/ssrn.3972111?"

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