When is a token a good or bad thing?


Short answer: If it doesn’t need a blockchain, it doesn’t need a token. Just because it needs a blockchain, doesn’t mean it needs a token. The harder part is determining if something needs a blockchain, which itself is pretty straightforward.

The blockchain is a specialized spreadsheet (uncensorable, unmutable, unturnoffable, etc) and the token is the economic incentive that drives people to add information to the spreadsheet in a very specific way. A token without a blockchain wouldn’t make sense because any company could print tokens whatever way they wanted to. It’s the same reason why fiat currency is imploding right now. People don’t have trust in a money whose monetary policy is ambiguous or unspecified.


One of the core uses of money in society is to drive incentives and disincentives. Why do you go to work every day? Because that’s how you earn your living. You provide your services, and your incentivized to do this because you get a paycheck. If you stop providing your services, you might get demoted or fired — aka. disincentives.

In the same way, internet money (i.e. tokens) can also be used to incentivize certain actions among a distributed set of actors on the internet in order to achieve a common goal. The earliest example, obviously, is Bitcoin. Bitcoin uses mining rewards as an incentive to coordinate miners to do a bunch of heavy computation work to try to solve the Proof-of-Work puzzle in order to validate Bitcoin transactions. The algorithm is designed to disincentivize these miners from trying to mine an invalid or fraudulent block because the likelihood of them losing money (i.e. from spending money on hardware electricity) are higher than the rewards they would reap from doing that.

Similarly, a token can be used on any digital platform where you are trying to incentivize certain actions from a set of actors in order to perform a common goal. Of course, the hard part is getting the incentive structure correct so that it is economically sound and not easy to game. No easy feat. But if you can do this, there are all sorts of ways to use tokens.

In short, tokens can be used to incentive users to provide some type of service or work — writing, curating, computing, and of course, fact-checking like we do on TruStory :wink: — to achieve a common goal in a system (e.g. determine the truth)


How can we make sure that token holders don’t work towards maximizing the value of their holdings rather than focusing on curating high value content ?


Token is a good thing when we reward people or organizations with cryptocurrency to show appreciation for the value of their services that we didn’t or couldn’t recognize them as such with fiat (i.e. housewives, teachers, journalists, nannies, etc.).

Token is a bad thing when we buy it to make money quickly and dump it right away when we no longer have use for it (i.e. ICOs, pump and dump, token sale, etc.)


The value of the token is inherently tied to the quality of the content. In other words, the market won’t give the token a high value if the category is full of useless/false stories.


I think above two answers gave a good explanation about why would someone need a token in their ecosystem. Before talking about tokens, you have to understand why would someone wants to use blockchain. Blockchain is a way of decentralizing information. Decentralization means storing data on multiple computers across the world. Why would anyone want to store data on their computer? No one is good/honest in this world, you cannot trust anyone. This is one of main problem blockchain solves, it minimizes the level of trust we need between two strangers.

Well, I can say that “if you store data on your computer, every month I will pay you $100”. That is really not a great incentive to protect the network. Someone might take that $100 and act bad i.e. delete data/manipulate data. Because that $100 bill value is no way connected to how the network is performing. Let’s say the networks value up i.e. more users are using the network, then it doesn’t affect the value of $100 bill. If network value goes down i.e. no one uses the network, even then it doesn’t affect the value of $100 bill. So there is no incentive for the person who is storing the data to act correctly.

But, what if I create a token whose value is tied to the value of the network? Let me explain with an example " Assume that I work at a pub called NightLife as a bartender. Rather than getting paid in $$ I get paid in NightLife tokens. After the end of everday my boss handes me some NightLife tokens. If I want $$, then I have to sell these tokens to someone who needs them. These token have a constant supply and these tokens cannot be copied. If someone wants to enter NightLife pub or buy drinks at the pub they have to do it with tokens. Because the supply of tokens is constant, we established the concept of scarcity. How does the value of the token go up or down? If more people come to the pub, then more people need to purchase NightLife tokens to enter the bar. So there is more demand for tokens, so the price goes up. If fewer people come to the pub, then the value of tokens fall as no one wants to buy NightLife tokens. How would more people come to the pub? If I provide a good service then more people come to the pub. AH!!! there it is. I have to act correctly for the value of tokens to go up." There is an incentive for me to act correctly and a penalty for acting wrongly.

I hope this explanation helps.



this is excellent, thank you!


They go hand in hand. We’ve designed the token is designed so it’s in people’s self-interest to do what’s best in the collective interest. Copy/pasting an answer from our blog post: What is TruStory?

“The price of the category token is reflective of how useful that category is to people and how much people are willing to pay to modify information in that category. A category is useful when truthful claims are being created and backed, and false claims are refuted among other factors. If the category becomes meaningfully useful, people have a vested interest in maintaining its usefulness— those who built up the community and have earned tokens for doing so have a financial interest because their token’s price is riding on it and those who rely on the category for information have an interest to not let the quality of content fade away.”


You’re saying the token being is used to reward people is good. Token is bad when people are frauding. Agreed. I would add…

A token is a “good thing when we reward people…” It’s also a good thing that it can be used to punish bad behaviors.

A token is a “bad thing we buy it to make money quickly…” It’s a bad thing whenever money is the primary motivation because the token is supposed accompany intrinsic rewards of doing an action on the platform (ie. finding false claims, finding evidence, etc.) Someone who is selling quickly is someone who’s not motivated by intrinsic motivations.


Exactly. You hit the nail on the head.

Tokens, in some ways, are like equity. Just like stocks are pieces of a business, tokens are pieces of a cryptoplatform. People can see their stock/token appreciate in value, as the value of the business/network increases. How businesses/networks are valued is a question for another discussion.


Tokens can go bad or good and depends on how effective the human greed factor is addressed or regulated. I guess it depends on the token economics and governance mechanism defined for the network. I see non-tokenized content site Medium has better content than a tokenized content site Steemit. If a token is not tied to any cryptocurrency which can be traded in regular exchanges it has better chance to perform its intended role within network. The one thing I have concern is can the quality of a content be assessed in a decentralized network just by the regular expected actions of network players alone!


I agree! I wrote it on a weekday morning so didn’t enough time to write about it thoroughly. Thanks!


Too early to say, but good positives


Token is like points in loyalty program in airlines, clubs , online games etc.

The more you contribute to the network like spending time , money etc you get rewarded . Some work is more important to network so you get more token for the same … THIS IS GOOD PART OF TOKEN as it encourages meritocracy

The bad part of TOKEN is often how it get used …

  1. Can it create entry barriers for new entrants by giving unfair advantage ( scale , favourable incentives ) to early patrons like what has happened in bitcoins and other cryptos…

  2. Can it stifle innovation & opposition . Like since I hold large no of token and my voting power is higher than person whom I dislike . I will oppose his views irrespective of merit .
    Hence in democracy all citizen are given one token ( same voting rights irrespective of wealth, education etc )

  3. Can token be transferred from one generation to next … or each generation start afresh … How much credit/debit children have to bear for their parents success/ failures …

Many more … The problem of money and token are same …


I do believe the real tokenshit is when people use utility token as a speculative asset like the Smartest Guys In The Room.


I don’t understand the hate on speculation. Consider a situation where I’m earning tokens for participating in a decentralized reddit. I love the platform and I contribute gladly, but why should I be expected to hoard tokens? I will exchange the tokens for any other service that I want instantly and it might be the case that the decentralized reddit I’m using is not so popular and there’s very little demand for the tokens I earned. In that case, a speculative market for the tokens can be a great way to generate interest in the future of a platform and generate liquidity for the tokens with little demand as there would always be somebody who thinks this decentralized reddit’s tokens are going to be the hottest as the platform gains steam. The buyers in the market are taking the risk that they may bear a loss from buying the token and their incentive is the potential profit. Am I missing something?


this is all very interesting to me, and i can see how tokens have equal balance to money. i’m wondering as time goes by, if there will be communities based on “superiority”. i think having a hierarchical structure is hard to avoid, no matter what room you walk into, and everyone is looking for that “cool kid” they want to sit next to. i guess in this case, it will be the one with the coolest ideas or the most tokens. seeing others participate only makes me want to participate more. personally speaking, the more time i log onto trustory or slack, the more intrigued i become. this can get addictive, and you will want to continue to play the game - which isn’t a bad thing at all, because i’m learning! :slight_smile: i’m wondering if having more tokens will motivate others to want more tokens.

also, i can see how having “this amount of tokens” will give you access to certain types of rooms. on the other hand, i can see where “value” comes into play and those that disagree with the former version of “cool” will look for the latter (in this case value). there are so many roads and paths you can take with this. it does get exciting when you dive in, but also get’s overwhelming to think of the many possibilities.


I will focus on one specific type of token which I feel is driving the broader narrative around why new forms of token should be developed- community tokens (i.e., a token which allows different small communities to function better together, and grow)

Tokens are good and bad to community for the same reasons money can be considered as considered good and bad to a community.

Communities grow if net value of the community to its members grows. Money allows communities to scale, as they allow different actors to perform value exchange with less friction - the same reason money is considered to have largely replaced barter in big communities. E.g., I love trying out new experiences, and learning about new subjects or disciplines at my workplace. The head of the corporation that employs me values the service I offer to them, but cannot offer me the variety I demand. So can the corporation not employ individuals like me? Yes it can - by paying me a salary - in fiat money - for my service which allows me to try out new experiences elsewhere - this allows the corporation (a community) to grow.

At the same time, however, money encourages members to be more transactional, and less relational. E.g., If my corporation has a bad year, and suddenly starts paying me less money, I suddenly start distrusting the organisation, and blame for it for all problems. It wasn’t providing me variety, and now it taking away means by why I could buy variety from elsewhere! The corporation therefore suffers from a really high attrition rate, and ultimately stops growing beyond a certain point.

For a community to grow AND sustain, it is therefore important to balance the use of tokens to drive community growth, with the need to develop strong relationship driven communities (which enable value exchanges without use of tokens). Good corporations (and communities) will look beyond relaying monetary benefits - it offers me access to mentors who can help me grow, the opportunity to work on projects that interest me, and develop meaningful relationships with the people I am surrounded by.


Hi Bruno,

Enron: The Smartest Guys in the Room links to a video that’s no longer available.