The State of the Token Economy: A Look Towards 2019 and Beyond

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Antonio Calabrese

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As we turn the corner into the new year, we’re met with the usual echoes of fear, uncertainty, and misunderstanding that seem to circle the token economy en masse.

The beginning of this year is particularly turbulent given the chaos on the mature markets (NASDAQ/Forex) which have echoing repercussions on the token economy — especially when it comes to capital, trust, and regulation.

Today, we’re going to ignore the price predictions — which tend to be wholly unfounded (i.e., insanely high prices touted by heavy investors or rock-bottom guesses coming from those who fear change.) Instead, we’re going to take a realistic look at the token economy, and some of the changes on the horizon — unplagued by investor bias.

This is a look at the future of the token economy without the words “bear run” or “bull run.”

Blockchain is Exploding

The token economy is intrinsically tied to blockchain technology. So, it’s probably a good idea to start this post out with a look at how blockchain is doing in the tech space.

The answer? Blockchain is doing better than ever. 2019 – 2022 are going to be the years of blockchain.

As AI continues to roll out of the gates and completely reshape industries and workflows, blockchain is the ideal partner for growing tech across sectors.

Since blockchain can give peer-to-peer access without the ability to tamper source data, it has positioned itself as the ideal solution for growing data consumption — especially in any system that requires multiple touchpoints.

What does this mean for the token economy? We’re going to see an explosion of useful ICOs. We need to clarify “useful” because the beginning-phase of “I have an idea but no product!” has completely died off.

“The builders have been building in 2018, so for 2019, I think we will see a lot of real products and real applications coming into the market.”

Changpeng Zhao, Binance CEO and Founder

This new wave of ICOs backed by functional products is going to revitalize the industry — both in terms of capital and trust.

Really, we’re looking at a market that’s beginning to mature. ICOs aren’t extremely overvalued, story-driven, and philosophical-white-paper stuffed anymore.

We’re seeing actual use cases.

Without a doubt, this is a trend that will continue. ICOs are still a powerful way to fund startups, especially in hectic market times (like now) where ventures are looking for safe-bets as they safeguard against dropping valuations.

And, we’re set to see ICOs transition from idea-based to product/security-based, and we expect that valuation will begin to be tied to products/companies (not interesting algorithms).

Do we need more POW/KGW tokens (a.k.a “altcoins”) mimicking Bitcoin with no base value? No.

Are we going to see more tokens backed by something of substance (security or utility?) Absolutely.

The recent market upset wasn’t the decline of ICOs; it was the shake-off of all of the valueless, scammy, and meaningless ICOs that had been reproducing like rabbits in the corners of Instagram influencers and fancy whitepapers. We’re entering maturity — which is good for all of us.

The Future is Bright for BOTH Security and Utility Tokens

While a good portion of the press seems to be aimed at security tokens, utility tokens have been performing strong.

Sure, the excitement of being able to diversify and fracture investments is appealing to the Wall Street circle, but utility tokens are still a great gateway into products and services for the every-man. It’s important to note, utility tokens without a use case are virtually worthless. We’re talking use case tokens here, not pseudo-utility tokens riding on the high notes of new tech hysteria.

In other words, the security token of the future will meet these requirements:

  • Regulated
  • Backed
  • Secured
  • Obviously, meet the Howey test

While utility tokens will meet these requirements:

  • Use case
  • Rapid
  • Functional

All of the turbulence that’s slowly stabilizing the market is also echoing sentiments of “token superiority” — no such thing exists.

It’s not utility vs. token (it’s never been,) It’s useless tokens vs. useful tokens.

Venture Capital is Coming

As crypto leaves the screaming philosophical fanatics behind, we’re going to see more blended portfolios.

ICOs are starting to utilize venture capital, which means that they’re blending the token economy and fiat currencies together. Of course, there’s some immediate fear for startup ICOs when venture gets introduced into the equation — it’s going to consolidate the market.

Which, honestly, is going to happen. It’s the sign of a mature market. Money isn’t just getting thrown around anymore.

You have to be strategic, prepared, and ready to present a good solution to the right people. Although the initial madness appealed to some who desired an escape from the confines of Wall-Street, the blending of markets is a necessity.

The cream will rise to the top, venture capital will flow, and big ICOs will start making major moves in the market. This may be a year or two away (at least regarding standardization), but it’s certainly going to happen.

Hello Regulation

This is about the least wild prediction on this list. Regulation is coming. Let’s clarify — more regulation is coming.

Regulation, really, is already here. But, as governments and markets “figure out” where to position the token economy, ICOs are going to have to start paying careful attention to geo-location (concerning taxes) and their specific solutions (utility, security, etc.)

Of course, these new regulations will undoubtedly reduce the number of public sales. Faith in the public market is already dipping as ICOs public perception takes damage from negative press and funding becomes more difficult and regulated.

We expect to see private funding surge this year. It’s easier, safer, and more strategic to raise from private funds than to take the token public.


As the market begins to mature and fracture away from the bitcoin/altcoin madness, we’re starting to see the silhouette of a mature financial market.

Regulations are here, tokens are more appropriately judged and categorized, and investors are being much more cautious about throwing money into-the-wind.

ICOs that want to succeed need to show value and appeal to the right people. Private funding (i.e., venture) is now a smart avenue for investors to take, and we expect venture to dig deeper into tokens over the next few years.

The future is brighter than ever for ICOs — despite the propaganda being blasted from lovers-and-haters alike.

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