The Rise of Community Tokens: How Blockchain Technology Will Change How We Build Communities

**This article should not be taken as investment advice. This is for educational purposes only**

The pillars of a well-functioning community—professional, social, geographic, or otherwise—are a strong understanding of the needs of the members that comprise it, a sense of collective ownership, and either implicit or explicit benefits for contributing to its construction and/or maintenance. Incentives for being part of communities are highly diverse.

Still, ultimately, it’s a means of leveraging the power of groups of people working together to produce a surplus of benefits that members can draw from as needed. We’ve all benefited from “community”—it’s a core tenet of our school systems, sports leagues, affinity groups, religious affiliations, social services; it’s weaved into the fabric of our entire society. The benefits each member receives are never entirely equal, but it’s sort of like social insurance that we all want to have, and we’re fine with the slippage. We chalk it up to sort of a ‘societal safety net.’

Community was never really defined by financial gain. Of course, there are fees to join certain communities. But once inside, there typically isn’t an expectation that you’ll be paid for your contributions. However, as we speak, blockchain systems are being built and optimized to provide the ultimate incentive to participants of a community—quantifiable value.

What if we could peg the value of a community to a currency? What if by participating in a community’s growth, members could benefit financially?

It’s easier to show you what’s already going on – so let’s look at two examples that exist today…

Chiliz ($CHZ) – Collective Ownership, Consensus Decision Making, Audience Monetization

Imagine this…

TWITTER: Tonight, the Bayside Billy Goats take on our most hated rival, the Centerview Locusts. #GoatHerd, what uniforms will Bayside take the field in? Log on to the Goat Farm platform and pick now!

That’s a hypothetical example of what’s being done with the Chiliz network today. By setting up a platform backed by the Chiliz token, fans can buy the token and trade it for a share of ownership of the community for a specific team’s fan network that will provide them with voting rights, access to VIP offerings, fan experiences, and much more. This opens the possibility for leagues that adopt Chiliz to allow fans decision-making power for recruitment and trade strategy.

Fans get ownership of a team’s token by trading fiat currency (US dollars, EU euros, etc.) to Chiliz then going from Chiliz to the specific team token they support. As the team attracts more fans, gets better, etc., the value of their token increases. Hypothetically, a fan could move or have a life event that pulls them away from the network, causing them to decide to sell their stake and bank profit for their contributions to helping grow the fanbase.

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CoinDesk Token ($DESK) – Closed Community Access to Products, Services, and Digital Assets

This is a closed-loop, beta test currency and more of an exploration of how the mechanics of the digital assets world can be applied to existing communities. $DESK is a rewards system from the media platform CoinDesk that has two main goals—get event attendees hands-on crypto for the first time and reward them for their engagement.

For now, the only way to acquire this currency is by interacting with their event infrastructure. Examples would range from simply buying tickets to attending sessions or networking functions. Then, users can go to their marketplace and exchange their $DESK for non-fungible tokens of pivotal moments in cryptocurrency (blockchain ownership of the article from CoinDesk), access to influencers and leaders in the space, or even partnership offerings like pizza (a nod to another significant moment in crypto history).

Those are two examples of things that are happening right now to leverage community engagement. These are the mechanics of what will be coming next. Because, at this very moment, there’s a real movement in the digital assets space to create more sophisticated systems that can peg the value of a network to hard currency.

So, who will benefit the most from these community tokens?

Brands, social networks, and media platforms. Anyone with community stakeholders can provide exclusive experiences and can capture the passion their audience has for their brand identity. But more importantly, those fans will benefit, too.

Recently, during a discussion around the community token model, Raoul Pal, economist and CEO of the financial media platform, Real Vision said, “I’m a huge believer that community is the future of all business models and that tokenization is going to be the predominate way we organize these large, complex groups–whether that’s sports fans or around music artists or even businesses themselves.”

That’s because the real exciting thing about this mechanism is that every stakeholder shares in the value. Now, by being a heavy user, an early adopter, or a meaningful contributor, you can feasibly have more stake in the network depending on how those actions are monetized. So it plays upon some of the core components of community and rewards those behaviors.

What you are seeing is a decentralized, value-driven system scaling communities by rewarding those that build and participate in them. With little more than the experience of being part of a cohort with a shared passion or interest, we can attract and grow a community organically and give it resources to have an impact on the broader communities that it exists in. This will impact us professionally, socially, and in ways, we can’t even imagine at this point. As more of these blockchain-based communities develop, we’ll be sharing how they are changing these dynamics and creating value for members.