How The Token Model Is Changing Coding For The Better

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For a long time free and open source software was a niche seen by many as a threat to major software developers and large corporations who wished to enforce stricter intellectual property rights. Although patents and intellectual property rights were originally designed to protect the rights of the creators, in coding this is often enforced to the detriment of the community at large.

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However, during the last decades, open source models were gaining popularity and had a loyal following particularly among Linux enthusiasts.

Open source offers great benefits in the areas of cost, flexibility, freedom, security, and accountability. You can see how the code is developed, what it does, and why. Unlike closed proprietary software, code can be altered and extended by any developer.

Today, due to the benefits of the open source model, GitHub hosts over 63 million projects and even the biggest opponents of the idea have started to embrace it, such as Microsoft, seen by many (myself included) as the antichrist of open source.

But open source projects have always had issues with monetization. After all, they are embracing a new model, something that doesn’t fit into the industrial mindset the world currently runs.

With the advent of cryptocurrencies and tokens, this issue is being addressed now. Open source projects can now either become a blockchain protocol or a network -- meaning that tokens would give the user access to some unique functionality inside it -- or they can issue governance tokens that companies that use the software could buy in order to have a voice in the project.

In the old world, someone using your work would be seen as a thief, stealing. Now, the more people build upon your protocol or project, the more successful you will be, since that would mean your protocol or project has proven to be useful.

In the first half of 2017, open source blockchain projects in the space raised $1.27 billion selling their tokens. The emergence of this new economy is levelling the playing field and empowering small projects with large ideas, no longer having to go adhere to the traditional industrial model of a company or going through the exhausting venture capital fundraising process.

Now, projects can easily create their own tokens on the blockchain, gathering funds directly from the community. This tokenization model also provides the project with an instant valuation of their tokens, and thus the project. Supply and demand working without interference and unleashing the power of the free market enabling full transparency for both the token buyers and the new project.

The open source model allows these companies to learn from each other, benefit from one another’s success and further drive innovation. Aragon, for example is built on the Ethereum blockchain, meaning that what is good for Ethereum is good for us and vice versa.

As we’ve already seen happen on the Ethereum blockchain, many open source projects have been able to gather millions of dollars from contributions to their projects. Some from larger contributors like venture capitalists, but more often than not, from thousands of regular people who want to use the token and support the project and help bring it to life. As this model starts to gain more traction in the open source community, the possibilities are endless. These free, libre, open source projects can begin competing with even the biggest companies and their network effects. All while being funded and supported by the people who believe in them.

Luis Cuende, Aragon Co-Founder and Project Lead

About the Author

Luis Cuende started his first free software project, an easy to use operating system based on Linux, at the age of 12. After multiple innovative features, like hybrid web applications and facelogin, he was awarded as the best underage European hacker by HackFwd, being only 15 years old. He was an Advisor to the VP of the European Commission regarding Digital Agenda and entrepreneurship. Many know him for the book "I'm 18 and I neither study or work" (2014), which includes a merciless criticism of the traditional educational system, and his vision on building a decentralized society. His latest company, Stampery, a blockchain data certification platform, was backed by the legendary venture capital firm Draper Associates, leaded by Tim Draper, investor in companies as Tesla, SpaceX, Skype or Baidu. He’s an Advisor to Primitive, a Silicon Valley-based company building the future of programming with Virtual Reality. He has been listed by Forbes as one of the brightest tech entrepreneurs on their 30 Under 30 list, and by MIT as one of their Innovators under 35. Now, he created Aragon to disintermediate business, by making decentralized organizations widespread.



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