We’re excited to share a guest post today from Eliot Couvat from Eliot’s Crypto Newsletter. Eliot is the Head of Content at Coinvise and the author of the book "The Social Token Revolution”. Eliot has helped dozens of Web3 communities grow from 0 to 1 and now shares his best learnings on Web3 branding and marketing online.
What's the purpose of a token? Or even Web3?
This is such a basic question, and yet, it's sometimes hard to find a clear explanation of why one should create a token or leap into Web3.
If you've been digging for a little bit, you might have heard about tokens being a better coordination model for communities, a powerful new tool for digital reputation, or an opportunity to provide voting power, foster culture, and give power back to the people.
While all of this is true, it's very complicated to visualize how exactly things work and what's the purpose of all this when you don't experience Web3 on a daily basis.
Trust me, it's not so easy to explain to someone what bottom-up governance and a Decentralized Identity are in casual conversation.
Just two weeks ago, I listened to an episode of The Farmspot podcast, where the interviewee (a well-known Web2 founder) wished for “someone deep into Web3 to really explain why it's so crazy and why it's going to change everything - in a simple way."
So I paused the episode and tried to find the single, most basic argument that'd "click" with non-crypto-native individuals.
And I think I found it.
For me, Web3's whole value comes down to a simple principle:
Permissionless Ownership.
Basically, the fact that anyone can own anything without asking for permission.
To truly understand the depth and the radical change this basic principle brings to the table, we first need to explain exactly what Ownership means.
As explained in the thread above, Ownership in Web3 comes down to 3 aspects:
In the case of Web3, X is anything that is on a blockchain.
Anyone can, for example, purchase an NFT that unlocks new experiences (access), governance rights (governance), and price exposure to the ups & downs of the community (exposure).
Another element that is on-chain: Data.
Let's take an example that shows how one could leverage on-chain data to make this concept of Permissionless Ownership easy to understand.
Let's say I, Eliot, have created a strong audience of Web3 community builders through my newsletter, and a new Web3 startup is targeting exactly "Web3 community builders".
This new startup could access all the individuals I sent $ELIOT to, and decide to send them their tokens or NFT to grant them access to their community.
By accessing all my previous $ELIOT transactions, this new startup would have access to the wallet addresses (Web3 version of an email address) of every $ELIOT holder, along with the number of tokens each member holds.
The blockchain is basically a giant Excel sheet that anyone can access, get equity in and govern without ever asking permission from anyone.
In a parallel world where Nike and Adidas were crypto-native and transacted with blockchain technology, Nike could get access to Adidas' list of clients, then use this list to send Adidas' clients a discount for the new Nike shoes. All at scale and in one click.
You can already get access to the tech-savvy clientele of Nike and Adidas here.
Now I'm sure you might think, "this is great and all, but how can I, after reading this article, leverage Web3 for my project."
Well, there are some concrete actions that would take you minutes to implement.
Imagine, for example, you create a community for Marketers, and everyone who ever went to a marketing conference holds a POAP (Proof Of Attendance Protocol), basically, a ticket as an NFT.
You could easily send (in Web3, we call this "to airdrop") your NFT or fungible token to everyone holding one of those POAPs, inviting in one-click millions of marketers to join your community.
We can take this example further and continue to use other communities' data to create the best marketing community out there:
And this doesn't stop here.
Once you've attracted your new members, you can offer them a targeted experience by still using on-chain data:
There are actually plenty of no-code tools, such as Coinvise (disclaimer; I'm their Head of Community), that help you do this in a few clicks, with an easy user experience and without needing any technical experience.
Check the video below to see how it works.
Because Web3 companies built their infrastructure on a blockchain, all their transactions are freely accessible.
No companies freely share their list of clients online on the centralized Web.
But in Web3, this data is automatically on the blockchain.
Anyone owns them and is even encouraged to leverage them.
Permissionless Ownership is a fundamental change in how we think.
Users aren't locked into a platform anymore. They have the ability to navigate web3 as they please, with bridges establishing a sustainable data flow among platforms to encourage a circular economy.
Permissionless Ownership removes the friction of being locked into a platform for users, moving the battleground from attention to utilities, and giving a chance to communities and creators to build new experiences.
If the users are not happy, they can simply take the data and "fork" the project, meaning using the code and data available on-chain to create a new project with a twist to it.
As I explained in a recent article:
"Because of Web3's principle of composability - meaning data is interoperable and allows any apps to communicate and work with each other - new projects can easily incentivize specific users to move over to them through a "Vampire attack" strategy. Basically, identifying power users of competitors' projects through accessible data and creating a *somewhat* similar project, adding strong enough incentives to "suck" power users out of your platforms.
That's what LooksRare did to Opensea (NFT marketplaces), SushiSwap to Uniswap (crypto exchanges), and we'll see more and more Vampire attacks in the future. This is inevitable."
This paradigm shift allows new entrants to enter the market more easily, and forces Web3 projects to double-down on creating a strong narrative, a community, and a brand that people want to be associated with.
I expanded a lot about Permissionless Ownership in the case of owning data, but it can be applied in a myriad of other use cases. Lens protocol, for example, allows creators to post uncensorable content and have their followers automatically on any platform within their ecosystem (imagine if you had all your followers from Substack, Mirror, and Twitter without the need for you to tell them to follow you everywhere). No need to ask permission and prey for Twitter to not ban your content. You own your Data, and don't need permission from anyone to post.
Because Permissionless Ownership requires a number of tools and knowledge, we're just starting to see Web3 projects and communities really leverage the capabilities of this concept. That's why, to come back to our original question, so many people still don't get the point of Web3. Because it took almost 2 years of a bull market and slow adoption to see the right tools emerge for this future to become a reality.
One thing is true, however. Once Web3 projects start leveraging this concept, there will be no turning back. Permissionless Ownership removes the main competitive advantage of Web2, allows new marketing tactics, and makes your community stand out not because of what your company owns but what your community offers.
Permissionless Ownership comes down to a fundamental change in how we think and is, for me, the single reason why Web3 will outlast Web2 in the long term.
So the next time someone asks you the purpose of Web3, simply answer:
"It allows anyone to own anything without asking for permission from anyone."
