 With major technological, social, and economic processes of change underway, we are fast moving away from the well-established model of the industrial age and into a new form of digital networked economy where the traditional, well-defined parameters of economics are being once again revisited as we search for a new model better suited to this new reality. One aspect to this is a reconceptualization of the very foundations of economics. That is to say, the idea of value. With token economies, we are really re-exploring what value is and how we quantify and exchange it. Part of this equation is the differentiation between intrinsic and extrinsic value. The economic system that evolved over the course of the modern era has come to be based on utility as a measure of extrinsic value. Token economics is a more generic form of economic model that lets us define not just utility, but also intrinsic value. To make sense of this, we need to first look at what we mean by utility and intrinsic value. Things can have value both in and for themselves and as means to other ends. For example, a tree has some kind of value in and for its role within an ecosystem, but it also has value in use as firewood for heating. The first form of value we call intrinsic value, and the second extrinsic value or utility. It is important to make this distinction because the two have very different properties. For example, most of us recognize that having many friends and connections has a certain value, but we also recognize that this is different from financial capital. Buying friends is not the same thing as having friends. Why is this so? Because money is a measurement of utility, while friendship and social bonds are seen to have some form of intrinsic value. Though our traditional monetary system does not capture this form of social capital, in some way token systems can. For example, likes on social media can be a form of tokens, with those tokens representing your social capital. This subtle difference between intrinsic and extrinsic value and how we may harness and capture them through tokens is very complex and something we are just beginning to explore. Our traditional financial system and the basis of neoliberal free market economics is the construct of value as utility. Utility is the value that something gives to some person. Utility implies that it has a general and immediate usefulness that people would be prepared to pay for. Utility is a measure of extrinsic value. Utility is instrumental, like a tool or an instrument. We use it for what it can achieve. We don't care about the system itself. Utility is always relative to what someone is prepared to pay for. Due to this, we can measure the value of something by looking at its supply and demand curve to derive a single price that is defined as the measure of its value. In contrast to utility is intrinsic value. Intrinsic value is the value that something contributes to the maintenance and functionality of a whole system. With intrinsic value, we have a unit that values the functionality of the whole network. For example, the social capital contained in the bonds of a society that enables it to function as a community is a form of intrinsic value. A mangrove swamp that preserves a local ecosystem and prevents coastal erosion is a form of intrinsic value. When we chop the mangrove down, that may deliver something we can exchange on a market and utility, but it has lost its intrinsic value in maintaining the functional integrity of that ecosystem. Utility is a measure of some derivative value, while intrinsic value is inherent to the network or system that delivers the value. For example, we are able to quantify, buy, and sell wood, but not the functionality of an ecosystem. We are able to buy care for elderly people, but we are not able to buy with money a functioning community that might provide this service organically. Intrinsic value is like a fixed asset. It is non-liquid. You can cash in the value of an ecosystem or of a community or culture, as we have done in many ways, but you lose a massive amount of the value when you do that. For example, research has shown that a mangrove swamp is worth orders of magnitude more when it is left intact than when it is cashed in. As a metaphor, we can think of utility as the lowest denominator, being divisible into many things and easily exchanged, whereas intrinsic value is the highest denominator, being non-divisible and non-exchangeable. Because it is intrinsic, it is inherent to the system and can't be easily ported to other contexts. Traditional currencies in the free market system only let us quantify and exchange utility. They do not account for the value that may be inherent to a system that is not of immediate utility to any actor. But token systems enable us to expand economic activity beyond the realm of utility. Token economies can be understood as a natural evolution to our economic system that responds to the broader set of values that people come to hold in post-industrial economies. The industrial age was all about the provisioning of basic tangible products, which the market system and utility captured effectively. A post-industrial economy, which all advanced economies are today, goes beyond this basic provisioning of goods. As people's basic needs are met, they move up the hierarchy of needs and start to care about and value a broader spectrum of services. The traditional model of utility tells us about the exchange and consumption of goods. It does not tell us about the quality of the social, cultural, or natural environment within which agents exist. Thus, actors can end up living in a severely degraded social, cultural, and natural environment, which significantly reduces their quality of life. While still, the economy is churning through vast amounts of resources so as to make up for this. And our metric of utility, in this case GDP, would still tell us that the system is in an optimal state. The economy is supported by a vast heritage of natural capital, such as clean water, sunlight, oxygen, etc., which stays providing the conditions for the inflow of natural resources. Whereas in the previous industrial age, these may have seemed infinite. Today, it is becoming more apparent that they are finite, and we are increasingly looking for means to quantify and integrate them into market decisions. Likewise, an economy is embedded within and dependent upon a massive nexus of social and cultural institutions that are required for it to function effectively. This value that is in social bonds that enables trust and frictionless exchange is called social capital, and the economy benefits all day every day from huge complex networks of social capital that go unaccounted for. But again, we are starting to take note of the value of social and cultural capital as important to the success of enterprises and economies. Increasingly, what people in advanced economies want from their economies is not just GDP, but quality of life, which is a much more complex thing involving many different forms of value. This is why a post-industrial economy is a services economy, and the best model for a services economy is a token model, because token networks can potentially capture and incorporate all the different forms of social, cultural, natural, and financial capital needed to provide quality of life. By excluding intrinsic value, we have created the notorious divide within the industrial economy between the market and the public sector. Markets were previously limited to utility exchanges and dependent upon public institutions to regulate the supporting social and natural capital. However, this is what changes with token economies as we can now begin to quantify, account for, and exchange social and natural capital. Going forward, we will be increasingly able to express social values through tokens via their programmability. Because tokens are digital, they may be programmed with certain rules, and when you have moved assets onto the blockchain, those programmable rules can be used to define what kinds of activities the token network supports or does not support. For example, if our society decided tomorrow that we no longer thought the eating of meat was a good thing and wanted to move away from it, we could do that by simply no longer purchasing meat products, and the entire industry would disappear quickly. In a token economy, we can put our money where our mouth is as proof of what we value. We could create a veggie token that could be programmed so that it could not be used to purchase meat products. Or, as another example, we may have a weapons-free token which is programmed so that it cannot be used to purchase weapons. If our societies had only tokens of this kind, then weapons could not be purchased and they would disappear. We could then see how much our society values peace by looking at how closely that token traded relative to another token that was the same but could be used to purchase weapons. If there was a big difference in the token traded at a very low price, then our society obviously doesn't want the token and is not willing to lock itself into a weapons-free world. We can see how this integrates social values with economic value in new ways and helps us escape from a world where people and politicians say one thing and do another. In many ways, it reflects the underlying blockchain proof-of-work or proof-of-stake system. The way that we prove that we value something is by locking ourselves into it. The way that we express our social values through an economic token is by locking ourselves into networks that express those values. This multi-value token system enables us to recognize and mobilize existing networks in new ways. Tokens help us to expand the economic system to incorporate more value systems and thus harness people's motivation along more dimensions rather than simply for utility-based profit. Tokens, because they are more generic, enable us to quantify almost any form of value, both extrinsic and intrinsic. When you hold a currency or an asset, you are making an investment in that network by saying that it has value to you. If no one wanted to hold dollars, then the dollar would have no value. By creating all these little economies with their own distinct currencies, we are able to say exactly what it is we value and invest our resources in that ecosystem. By holding the Liverpool Pound or the Bristol Pound, we are saying that we value that ecosystem and will invest our resources in it. When we cash our Liverpool Pound in for a British Pound, we are saying that we don't really value it. We are not prepared to restrict ourselves to making purchases only in that network and supporting the community value that it creates. This is why it is important to not think of Tokens as being like traditional currencies because they represent the possibility for a new kind of information services economy that is fundamentally different from the one we know and is a necessary evolution to our economic structures, just as significant as the evolution from a pre-modern feudal system to a modern industrial economy. Likewise, it illustrates the issues we are having surrounding regulation. A token economy is a different form of economy to the industrial economy. It will not fit inside the box of the industrial model because token economies expand the nature of markets to include a broader spectrum of values they can be self-regulating, which stands in contrast to our existing industrial age logic of the utility-based market, which always requires external regulation and support because of their incompleteness and narrow set of values that they incorporate. The token economy offers the possibility of creating self-sustaining economies by incorporating all relevant value systems within multi-value tokens and multi-value markets. While in the industrial economy, all forms of value could be reduced to a single metric of utility. A service's economy is inherently a multi-value economy. While extrinsic value may be reduced to a single metric, intrinsic value has many inherent forms of value, each requiring their own distinct token that is irreducible. To really understand the significance of token economies is to appreciate that society and economies evolve and change over time. And part of what is happening in the world today is an evolution in what people value. And that is a very profound thing that in turn requires a new economic model to capture and develop. Michael Bowens of the P2P Foundation describes this well when he says the three revolutions in human productivity. The first invention is coercive labor that gave us civilization, slavery and serfdom. That's how we created castles and temples. In other words, the motivation there is external negative motivation. I control you, I could kill you, but out of the goodness of my heart I let you live and you can work for me for the rest of your life. This is the social contract of slavery. I think capitalism introduces something new which is about self-interest. In other words, positive extrinsic motivation. I'm doing something because I'm going to get something from it which gives a boost to science and technology. I think we're going about a third revolution now which is actually moving from extrinsic to intrinsic. We are building systems, open contributory systems like Wikipedia and others where people are actually there for a variety of motivations. But there are mostly intrinsic motivation. I want to create a global internet encyclopedia. I want to create this. I want to learn from it. There are various motivations. Token economies is a new way for us to try and present intrinsic motives. It enables us to create economies that better reflect both people's intrinsic and extrinsic motives. But that relationship between intrinsic and extrinsic motives is extremely complex and subtle. Figuring out exactly how that works is a long learning process ahead.