This analysis was first published in SvD Näringsliv, in Swedish, on November 26th, 2022. This piece was translated from Swedish by Claude. Some phrasing may differ from a human translation.

After billion-dollar crashes and fraud across the crypto world, many are wondering whether the market is simply over. But what is called “tokenomics” has the potential to reshape large parts of society. The more interesting question is: do we even want that?

In the autumn of 2021, a piece of American history came up for sale at the prestigious auction house Sotheby’s. One of the thirteen surviving copies of the US Constitution was on the block. The slightly yellowed pages are considered a national treasure.

So far, perfectly normal.

Then the crypto world got involved.

A so-called DAO was formed — a decentralised autonomous organisation — with one single purpose: to buy the Constitution. Think of a DAO as the crypto world’s equivalent of a homeowners’ association. There are rules to follow, but no single person is in charge. Decisions happen through voting. Tokens give you a vote.

The DAO raised the equivalent of over 400 million kronor in just a few days. Tens of thousands of people participated from around the world, each buying in with crypto. It was a remarkable demonstration of what this technology can enable.

In the end, a private bidder outbid the DAO, and the document went elsewhere. But the experiment stuck.

Equity trading happens on exchanges with rules, customs and laws. That creates reasonably fair conditions. Trading in unlisted shares carries higher risk — which is why we have the term “venture capital.” Cryptocurrencies carry even higher risk, and far fewer rules. Fraud and pump-and-dump schemes are part of everyday life, even among established players.

There are differences between projects. Many enthusiasts would argue that Bitcoin is fundamentally different — technically and philosophically — from everything else. That may be true, but many speculators are not there for the philosophy. They are trying to make money.

Looking at price versus value in crypto, it is no exaggeration to say that prices have been high relative to the underlying value, which has often been low. But the function — the underlying promise of what this technology could enable — is worth examining independently of price.

That is where the real rescue of crypto’s reputation may eventually come from.

One area where it could have genuine impact is traditional finance. These initiatives are known as “DeFi” — decentralised finance. The idea is to trade financial products without centralised intermediaries like banks or central banks. Transactions can be faster and cheaper, at least in theory.

The underlying technology — blockchains — makes this possible. As a developer, you can build your own financial company on the Ethereum blockchain without needing external approval. Trying to do the equivalent inside Nordea or Swedbank would be nearly impossible, requiring both their goodwill and their permission.

DeFi removes the middlemen from financial transactions. Instead of trusting institutions, you trust the technology. Predefined smart contracts execute the transactions — no one interferes.

Another area is NFTs — non-fungible tokens. The NFT market has also crashed after intense speculation. Sales volumes fell 99 percent between May and September this year. But the underlying function remains, and it is a genuinely novel way to regulate ownership in a digital world that has historically been driven by copying. It also works for representing ownership of physical things. In the US, the first physical house has already been sold as an NFT.

There are interesting tendencies on the horizon, despite all the crashes. When, or perhaps if, these markets can regain consumer trust, tokenomics could become building blocks for a new kind of internet.

But perhaps the most interesting question is also the simplest: do we actually want it? When more and more things are represented as tokens, more things become tradeable commodities. Life starts to resemble a trading floor — one that can also get hacked. Tokenomics makes it possible to own a fraction of nearly anything. That is a significant statement about where the world might be heading.