Thinking About Different Types of Digital Value Exchange

I’m using this post as a place to take some notes while thinking about this whole NFT/blockchain thing.

The way I see it there are multiple things happening at the same time, but with a common theme: low-friction, granular value exchange—done digitally.

To me this is a human development, not a technological one. It’ll be done digitally, and therefore with some sort of tech of course, but that tech doesn’t have to be blockchain, and it doesn’t have to be on any tech that even exists right now.

But here are the things that I think humans want, and therefore that I think are inevitable on some timeline and in some form.

1. Peer-to-peer Value Exchange — a.k.a., micropayments. Examples: tipping for physical services, tipping for good content online, rewarding kindness, etc.

2. Creator Economies — Influencers, artists, creators (whatever you want to call them) create their own coin on the blockchain and they offer different levels of access for X amount of that coin. Loyal fans earn currency just by being awesome fans, but you can also buy and sell the currency for real money. And there could even be sub-coins that can only be earned by loyal fans and aren’t for sale. And of course, different levels of access and perks are only available to people with certain amounts of certain types of coin. This is just like Patreon (tiers or service) or Twitch bits, except in an actual digital currency customized for a creator.

3. Granular Investment — Investing is prohibitively difficult not just because of the knowledge required but also the capital. Most people don’t have large quantities of money lying around. In addition, there are only certain things that you can invest in. You can invest in stocks and bonds, for example, but you can’t invest in someone’s career. Or your favorite sports team. Or your favorite influencer. Soon we’ll be able to do that. You’ll be able to invest small amounts of money in almost anything that has or could have value in the future. That includes real-world things like someone’s future earnings, or ephemeral/digital things like a one-of-a-kind sword for a popular game.

On the last one here—Granular Investment—I’m prepared to make an actual prediction. Like, a real one.

I think we’re about to see a type of company pop up that manages micro-investments for “the other 90%” of the planet. Kind of like a distant cousin of Affirm, where you can buy lots of stuff spread over time, this is where you can invest in lots of stuff—in tiny amounts—that accrue over time.

Here’s an example: Andrew loves Disney. His whole family does. He doesn’t invest in the stock market and doesn’t really plan to. But he’s smart and he knows that Disney+ is big. He signs up for one of these fictional new companies called Fraction, and he logs in.

He sees that he has the option to connect his paycheck to Fraction, or to push a certain amount of money to Fraction every month. And he also sees a giant wall of logos. Media companies, favorite TV shows, celebrities, sports stars, influencers, YouTubers, etc. In fact, he can type virtually anything into the search box and they’ll come up. From investing in Gold to investing in his friend’s blog.

So he goes through and selects a bunch of stuff he likes:

• Disney+ (Company offering)

• Marvel (Brand)

• Star Wars Mandalorian (Show)

• Star Wars Obi-Wan Kenobi (Show)

• Frozen Princesses (a meta group)

• Smitten Ice Cream

• Unsupervised Learning (my newsletter/podcast)

Once those are all checked, he then uses a pie chart and some sliders to decide how much of his monthly budget goes to them. So whether he has $5 dollars a month to spend, or $3000 a month, he starts squirting investments in them.

Then he does the same for donations! So this is the granular level of support he gives his influencers per month, just because he likes them.

Then, everywhere that creators have a presence, e.g., YouTube, Twitch, their websites, their podcasts, etc.—there’ll be a Fraction button (or some generic form of that button), which allows people to click on it and give kudos. Meaning money.

How much money?

That depends on how much they’ve designated as being available for that budget within their Fraction account! So if you have $100 in your Fraction budget every month and you give 100 kudos, everyone gets a dollar. And if you only give 2 kudos, they both get $50 dollars.

A company called Flattr tried this years ago, but they were just too early.

You might also be able to give money to other people, but only in their PIF (Pay It Forward) account, which means they don’t get it directly but it goes into their budget for giving to creators.

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You can also give money in the form of investing for someone through Fraction. So if Andrew does something cool for me, I could give him $500 dollars in investment in Marvel, which instantly gets added to his own Fraction account.

Anyway, the point is that all of this will likely be made possible by either a blockchain or some other technology that works like a blockchain. And with digital currency like Doge or Bitcoin, or something that works just like it.

I think everything on this page is 100% inevitable because it’s a natural evolution of how humans will interact with each other. What I don’t know is when it will happen or whether any of the tech we have right now will be part of it.

It could all happen this year built on Ethereum and Dogecoin (which I’ve invested in by the way), or those technologies could completely die off and get replaced by something else.

I think it’s important to think this way, i.e., about what parts of a given movement are the human layer and which are the implementation/tech layer. It’s possible to make some really bad predictions—and investments—if you confuse the two.

So that’s pretty much it.

When people are talking about crypto, and NFT, and micropayments, and all this crazy stuff we’re hearing right now—take the time to break them into their components.

I think in general they fall under a banner of “new ways of doing value exchange”, but I like making the delineations and assigning some labels.

It helps me think about them more clearly.