Blockchain Tokens and the dawn of the Decentralized Business Model

This is an oldie but a goodie from 2016. Brian Armstrong and Fred Ehrsam, founders of Coinbase, were among the earliest to recognize the game-changing potential of tokens in solving the “chicken-and-egg” problem. In brief, these problems arise when network effects are involved; e.g. Twitter has no value to its first user because there’s no one for them to follow. The value of a network is proportional to the square of the number of participants (Metcalfe’s Law). Tokens can incentivize early participants of a network by allowing them to capture a disproportionate share of the network in its early days. 


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