Comparing. Value Engines
Next: Forces analysis.
Value Engines
What is the core in these two models that motivates people and powers the system to develop further? Let’s start with an analogue.
There are two types of animal species in nature – tournament species and pair bonding species. An example of tournament species is peacock. For tournament species very large physical differences between males and females are typical. Male is larger than female, during mating times there are fierce battles between males to reproduce, males do not take care of offspring (hard if during rutting season you have collected a harem of a few dozen females). Females tend to be faithful as males are not. Tournaments (both physical and expensive physical features) are a way of selecting individuals with the most successful genes for reproduction.
An example of a pair bonding species is a marmot. Male and female look alike and are about same size. They have relationships for life. Females are more unfaithful as the male sticks around. Pair bonding is a strategy where both parents invest into the offspring giving it more care, protection and guidance for life, thus increasing survivability for the little ones.
Humans have features of both types of species. We are a halfway construction, flip-flopping between these two alternatives. One of the blind spots in thinking is to believe in binary logic – you have to pick one strategy. Both models are surviving in nature proving that both models can produce great value. Perhaps the secret sauce behind our success as a species is the both-and nature of us. It’s a complex, chaotic world and future keeps changing. A shape shifting flip-flop is the bedrock onto which success if built.
Current Value Engine
These two types of strategies for species also map nicely to the two great value engines behind modern societies.
Competing enterprises are similar to tournaments. Focus is on winning over the competition and conquering markets. Even words that businesses use echo this sentiment: there is sales force, markets are attacked etc. This is a great motivator for development. Several other areas of life also have varying degrees of competition (schools, finding spouses,..)
The state is there to enforce cooperation. A scheme where competing individual agree to impose rules to prevent catastrophic outcomes. This is especially important as there are natural monopolies like roads, harbours, water works. An alternative would be giving open extortion rights to a private organisation. It’s been tried and has not delivered great results.
The main tool for enforcing this and creating trust is the legal system. Trust int turn ensures that people can get into contracts and run their businesses. Without trust business tends to be done only with close relatives or previously known parties. With trust we can do business with total strangers.
State ensures that everyone has opportunity to good quality education, health care to ensure people do not suffer unnecessarily and can return back to productive life. Free markets so that people can find a position meeting their skills and enthusiasm and laws protecting enterprises against unfair competition so they try to win markets with better and cheaper products and services.
This is a dual competitive-cooperative system currently in place.
What happens when digital goods are freely available and work moves to small teams scattered around the globe? What becomes the great motivator for future developments?
New Value Engines
Good questions and as we know, good questions seldom have good, clear answers. Especially when we are talking about the future that has not yet happened. Let’s give this a spin just to laugh at ourselves after a few years.
There necessarily isn’t a single model because the programmatic nature makes experimentation easy.
Let’s look how Bitcoin motivates participants as an example.
In Bitcoin network the so-called miners – participants who verify that the transactions being written to the unchangeable chain of records aka blockchain – are rewarder with Bitcoins. This has been working for fifteen years now proving that decentralised cooperation rewarded by an algorithm can work on global scale.
It’s clear that miners could save money by co-operating and restricting the amount of computing power they collectively use - getting same results with less costs. But as they do not know each other, this drives all of them to optimise their personal capacity to gain bigger rewards or at least keep current share. As an end result the capacity of the mining pools grows.
This isn’t competition in the traditional sense nor is it cooperation either but rules give incentives that reward desired actions.
Token models allow quick experimentation with all kinds of schemes that we cannot yet anticipate.
Other motivational aspects for sure will be the reputation and scores that come from usage and user reviews of the repository content. That’s how different project “compete” with each other for the top spot as the best option for any given category. Best projects with the most active and helpful community attract users.
Projects can also reward contributors from the revenue stream directly as discussed already.
Different projects compete with each other - both in same vertical and between verticals and technical blockchains underlaying as well.
Trust in web3 is achieved with immutable records prevent falsification of history, asymmetric keys pretending to be someone else and smart contracts defining what is possible to do (i.e. you can only do enabled things).
As a summary we3 works so that there is competition between projects, the mathematical foundations of web3 provide trust and within projects the incentives must be defined to reward cooperation. The duality of man is maintained.