While points are accumulated, tokens reinforce consumer behavior

People often think that token economies are equivalent to point systems, which give points to customers based on how much they purchase. Yes, a token economy seems similar to a point system, but they are fundamentally different. Point systems are derived from consumer purchases while token economies are based off on consumers’ actions. Simply put, points are accumulated while tokens are a form of compensation. Based on a point system, only people who spend money are seen as consumers, while those who haven’t made purchases are also deemed consumers in a token economy. The traditional token economy was utilized in schools and hospitals in the 1960s for the purpose of education or treatment. Made of paper stickers, the tokens don’t have much value in and of themselves. However, people could enjoy benefits like receiving treats or permission to go outside in return for the tokens. This eventually reinforced specific behavior in people. The Skinner box is another example that demonstrates how reinforcement changes people’s behavior. The Skinner box is an experimental box created by behaviorist Burrhus Frederic Skinner. In this experiment, a dove is put inside a box after being starved for a day. The hungry dove would find a lever in the box, which it presses and gets food from. The dove, after repeating this behavior, would realize that pressing the lever results in food. This strengthens the dove’s inclination to press the lever. According to Skinner, carrots are better than sticks at strengthening certain behavior. Token economies function based on that same principle. The token has returned to the modern economy in the form of blockchain. Based on the irreversible and transparent nature of blockchain, coming from its encrypted algorithms, and the convenience of the smartphone era, the token economy has risen as a key element in driving the blockchain project. We have entered an era where people receive tokens as a reward for functional acts like writing or playing sports. Creative models of the token economy are continuously being introduced. Token economies can exist without the use of blockchain technologies, but a token economy based on blockchain technologies allows people to trade and transfer tokens with ease regardless of location. According to the Financial Supervisory Service, the amount of credit card points wasted annually sum up to 130 billion won ($109.9 million) out of 2 trillion won. When including in the calculation points from department stores, cafes and movie theaters, even more points are wasted. Although an integrated point system is appearing, the system requires negotiations and partnerships among central organizations. On the other hand, a decentralized blockchain can facilitate the global trade of tokens 24/7. Marketing among corporations will likely become more intense in the blockchain-based token economy. Instead of limiting consumers as merely a sales variable, they will be regarded as supporters who make contributions to the growth of corporations. The key to the success of the token economy is sincerity. People like to enjoy economic benefits, but often act against their own good. That’s why the token economy is closely connected with behavioral economics. Among companies that merely view customers as a sales variable and companies that show gratitude toward their customers, which will people support more? Which leader will be loved more, the one who rewards people for small acts and fosters digital technologies or the one who tries to restrict digital technologies? Amartya Sen, an economist who was awarded the 1998 Nobel Memorial Prize in Economic Science, once said that social change needs to take the change of individual behaviors into consideration. Kim Moon-soo, head professor at the Seoul School of Integrated Sciences & Technologies

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