Distributed ledgers are incentive machines

The blockchain community understands that blockchains can help align incentives among a tribe of token holders. Each token holder has skin in the game. But the benefit is actually more general than simply aligning incentives: you can design incentives of your choosing, by giving them block rewards. Put another way: you can get people to do stuff, by rewarding them with tokens. Blockchains are incentive machines.

Bitcoin is the first example of a new form of life. It lives and breathes on the internet. It lives because it can pay people to keep it alive. It lives because it performs a useful service that people will pay it to perform. … It can’t be stopped. It can’t even be interrupted. If nuclear war destroyed half of our planet, it would continue to live, uncorrupted.

We have a life form that we basically can’t stop, which is optimizing maniacally for that most precious resource — energy. This life form is called Bitcoin.

We need to get incentives right when we build tokenised systems. Once they get started, they can be very hard to stop.

A series by Trent McConaghy from Ocean Protocol: Can Blockchains Go Rogue? Towards a practice of token engineering Token engineering case studies