Utility tokens are fungible tokens that unlock functionality in a smart contract or off-chain system (like a Discord community). Utility tokens are difficult to enforce off-chain, so they tend to be most valuable when their functionality is enforced purely on-chain, through smart contracts.

Although there certainly is a risk of over-financializing relationships, many people have talked about the tight bonds developed through these economic graphs.

At the simplest level, tokens are just code that lives on a global peer-to-peer network called a blockchain. But unlike other forms of money, they’re digitally native, programmable, and secured by one’s crypto wallet and private key. Cryptocurrencies are just one type of token.

What if Spotify listeners voted on playlists and top curators received a mix of cash and Spotify stock? What if Pinterest compensated top pinners the same way they compensate top engineers?

These limitations reduce economic growth and amplify inequality. As more economic activity moves online, we need internet-native tools for building productive economies. Many people don’t have a bank account but do have a mobile phone with internet access.

Equity tokens are fungible tokens that represent ownership in an asset or a pool of assets. These tokens are used to incentivize participants to provide a scarce resource to a network. In cryptonetworks, scarce resources include capital, developers, customers, creators, and computing power.

Today, top creators are rewarded with inefficient virtual currencies (e.g., likes/follows) and cash from a centralized platform. In the future, creators will build a new form of status through these community-driven NFTs which they own through their private key and can directly redeem for money.

I believe NFTs like these will enable new types of relationship graphs which we can use to build better recommendation systems for job postings, content, dating apps, and much more.

Web 2.0 was about social graphs — follows, likes, comments. Web 3.0 is about social + economic graphs — NFTs you buy, projects you invest in, social tokens you earn. Company profiles on Crunchbase are an early example of economic graphs. For most startups, you can see who funded them, how much they received, and when the funding round took place.