Blockchain tokenization and the public infrastructure

re:publica 18 - Politics & Society

To establish trusted virtual currencies in the form of token systems is nothing short of a hype right now, and it can in fact solve certain problems. But whether the management of public (digital) infrastructure can benefit from it, is still an open question. Looking at it from the viewpoints of self-sovereign digital identity and free knowledge, we will talk about what blockchain-based tokens can and cannot do, which problems they solve and which they merely shift around or substitute with other, possibly even bigger problems.

• John Weitzmann
• Kai Christian Wagner

Blockchain-based tokenization is all the rage. It can be used to build trusted virtual currencies into any kind of project or enterprise – with a view to providing the people involved with an objective way to incentivize whatever is needed, be that computing power, exchange of data or the involvement in a project in general.

To be active in such systems requires spending tokens that you either buy or earn based on other contributions. In the Bitcoin system, tokens are issued to “Miners” that contribute to verifying the blockchain. But the contribution earning you tokens could also be any other kind of effort, like editing content or sharing data. Inevitably, this introduction of currencies brings about the monetary dynamics of economies, i. e. systems framed by laws (code), organized in markets and governed by structures that can range from dictatorship to democracy. If we acknowledge the complex dynamics of economies, questions arise about the potential risks and benefits of tokenization, especially where it is introduced to manage public infrastructure.

Two such infrastructures are free knowledge and proof of identity. Both require a continuous investment into maintenance, but everyone is free to use them without charge. Projects like Wikipedia run on volunteers and donations, proof of identity is most often provided by states, sometimes by companies in exchange for privacy and personal data. Tokenization could be a new way to ensure sustainability of this kind of public infrastructure by compensating stakeholders that contribute to it. It could allow for new mechanisms to redistribute power and wealth. Or it could create detrimental patterns of power accumulation and inequality – something we might not want around public infrastructures. So, is tokenization good or bad for public infrastructure?

In our discussion, we will shed light on existing models of tokenization and discuss the future potential for its use in the context of public infrastructure.

supported by T-Labs