Workers of the Internet, Unite!

One of the potentially revolutionary impacts of blockchain will be converting consumers and users, who currently either do "work" for free or pay out-of-pocket for non-tradable items, into asset owners who share in the value of their contributions.

While the user interface - also known as Layer 3 - of applications may look similar to what users see today, incentives will change and beneath the surface, the infrastructure of Compute (Layer 1), Consensus (Layer 1.5), and Smart Contracts (Layer 2) will be quite different.

A few examples:

• Gaming: A player spends many hours building a player profile, along with cash for virtual goods, but has no ability to turn this into an asset that can be sold
• Social Networking: a user spends hours scrolling feeds, sharing, liking, and contributing, but get only traffic and (potentially) attention in return
• Developers: developers contribute enormous value to open-source projects, but get limited to no financial return
• Digital (and potentially non-digital) task work: gig or task workers could be paid for completing surveys, watching (sponsored) videos, designing logos, tagging maps, or any other form of digital work.

The divide in the current environment is demonstrated in the market cap of companies in these categories. Facebook, Twitter, and Google are free. Why? For advertisers, user attention is the product, and - for the most part - users don't get paid a dime.

One way to think about the potential for blockchain disruption and value creation in end markets is based on the size of the potential market (GMV) and the level of user fragmentation. More fragmentation means more power for the market creator.

Blockchain has the potential to turn consumers into asset owners by establishing a market economy for time, attention, and digital goods.

• Players can own assets that can be verified, traded, and tracked. This is most likely to occur within a game or virtual world supported by one developer, cross-game and metaverse transactions may come with time.
• Application users can be paid for spending time and attention. Just like an expert who is paid for their time by an expert network, users will be paid for liking, sharing, and contributing. Tokens provide a network-based incentive.
• Developers can be paid a form of royalties, via a smart contract, for their contributions to a project, aligned to its success. The infrastructure for tracking developer contributions exists but the payment rails don't.

Risks to change

• The Cold Start Problem. As Andrew Chen has documented in his new book, priming the network from 0 is one of the most difficult yet valuable-creating challenges in technology. Many fail to overcome it. Tokens offer a new method of incentivizing user behavior, but it's far from clear token-based incentives will overcome the massive incumbent moats.
• Meet the New Boss...Same as the Old Boss. Blockchain supporters argue that new networks will form with aligned incentives and systems competition will remain intense since all IP is open source. But networks are not. Does a better search engine beat Google? The new system may just be the same names with new infrastructure or new names with the same heavy-handed behavior.
• Complexity and persistent fragmentation. Early adopters underestimate the scale of a truly global platform. Imagine a world with as many tokens as domains. Or networks of networks of networks. Network effects are more likely to drive consolidation than fragmentation, but the contrary is also possible.

Comments welcome!

Twitter: @briangoffman