Bryant Nielson | January 15, 2025
Ah, tokenomics. The word itself sounds like something you’d hear in a sci-fi movie about a dystopian future where people trade digital cats for virtual real estate. But no, it’s real, and it’s here. And believe it or not, it didn’t start with Bitcoin or Ethereum. In fact, the concept of token economies has been around for centuries, long before anyone even dreamed of blockchain. So, let’s take a journey through time—from copper coins to crypto tokens—and see how humanity went from handing out shiny metal discs to trading JPEGs of apes for millions of dollars.
The Humble Beginnings: Copper Coins and Customer Loyalty
Let’s rewind to the 1700s, a time when wigs were fashionable, and the idea of a “loyalty program” was as revolutionary as indoor plumbing. Back then, American retailers had a brilliant idea: give customers copper tokens when they made a purchase. These tokens could later be redeemed for goods. It was like getting a free coffee after buying ten overpriced lattes, except instead of a digital stamp on your phone, you got a literal piece of metal. Revolutionary, right?
This was the birth of the token economy—a system where tokens (in this case, copper coins) were used to incentivize behavior (shopping). Fast forward to the 1800s, and retailers realized that copper was, well, heavy and expensive. So, they switched to stamps. Yes, stamps. Green Shield stamps, to be precise. Collect enough stamps, and you could redeem them for products from a catalog. It was like the Amazon of the 19th century, except instead of two-day shipping, you had to wait weeks for your toaster.
The Rise of Airline Miles: Because Who Doesn’t Love Free Flights?
By the 20th century, tokens had evolved from physical objects to something a bit more abstract: airline miles. In 1979, Texas International Airlines introduced the first frequent flyer program, and suddenly, everyone was obsessed with racking up miles. Fly enough, and you could earn a free flight. It was genius marketing—people were literally paying to earn the privilege of paying less later. And thus, the modern loyalty program was born.
But let’s be honest, airline miles were also a bit of a scam. Sure, you could earn a free flight, but only if you flew 47 times a year and spent $10,000 on overpriced airport sandwiches. And don’t even get me started on blackout dates. Still, the concept of earning tokens (miles) for behavior (flying) was a game-changer. It laid the groundwork for the loyalty programs we know today, from credit card points to grocery store rewards.
The Digital Revolution: From Starbucks Stars to Crypto Kitties
Fast forward to the 21st century, and tokens have gone digital. Starbucks introduced its rewards program, where you earn stars for buying overpriced coffee. Collect enough stars, and you get a free drink. It’s the same basic idea as copper coins and Green Shield stamps, but now it’s all tracked on your phone. Convenient? Yes. Revolutionary? Not really.
But then came blockchain, and everything changed. Suddenly, tokens weren’t just points in a loyalty program—they were digital assets with real value. Enter Bitcoin, the OG of crypto tokens. Bitcoin introduced the idea of a decentralized currency, where tokens (coins) could be traded without the need for a central authority like a bank. It was like the Wild West of finance, except instead of cowboys, you had programmers in hoodies.
And then came Ethereum, which took things to a whole new level. With Ethereum, you could create your own tokens. Suddenly, everyone was launching their own cryptocurrency, from Dogecoin (a meme turned multi-billion-dollar asset) to CryptoKitties (digital cats you could breed and sell). Yes, digital cats. Because apparently, the world needed a blockchain-based version of Pokémon.
Decentralization: From Central Banks to Smart Contracts
The real game-changer in the evolution of tokenomics is the shift from centralized to decentralized systems. In the old days, tokens were controlled by central authorities—whether it was a retailer handing out copper coins or a bank managing your credit card points. But with blockchain, tokens are governed by smart contracts—self-executing agreements that run on code, not human whim.
This shift has profound implications. For one, it eliminates the need for intermediaries. No more banks taking a cut of every transaction. No more retailers deciding how many stamps you need for a toaster. Instead, the rules are baked into the code, and everyone plays by the same rules. It’s like the ultimate trustless system—except, of course, when the code has bugs, and millions of dollars get stolen. But hey, nobody said decentralization was perfect.
The Future of Tokenomics: Web3 and Beyond
So, where do we go from here? The future of tokenomics is all about Web3—a new iteration of the internet built on blockchain technology. In this brave new world, tokens aren’t just for buying coffee or flying to Cancun. They’re the backbone of entire ecosystems, from decentralized finance (DeFi) to non-fungible tokens (NFTs).
Take Visa’s Web3 Loyalty Engagement Solution, for example. It’s not just about earning points for purchases anymore. It’s about creating immersive, gamified experiences where customers can earn tokens for engagement, not just spending. Imagine earning crypto for posting a selfie with your Starbucks latte or completing an augmented reality treasure hunt. It’s like loyalty programs on steroids.
But let’s not get too carried away. For all its potential, Web3 is still in its infancy. There are plenty of challenges to overcome, from regulatory hurdles to scalability issues. And let’s not forget the elephant in the room: most people still don’t understand how blockchain works. (Hint: it’s not just magic internet money.)
From Copper to Crypto, Tokens Are Here to Stay
So, there you have it—the evolution of tokenomics, from copper coins to crypto tokens. It’s been a wild ride, full of twists, turns, and the occasional digital cat. But one thing is clear: tokens are here to stay. Whether they’re made of copper, paper, or code, they’re a powerful tool for incentivizing behavior and creating value.
And who knows? Maybe in a few years, we’ll all be trading NFTs of our coffee stamps on the blockchain. Or maybe we’ll look back and laugh at how we ever thought digital cats were a good idea. Either way, one thing’s for sure: the future of tokenomics is going to be anything but boring. So buckle up, folks. The ride is just getting started.
Disclaimer: No copper coins were harmed in the making of this article. However, several digital cats may have been bred for research purposes.