The Success of Incentive-Centered Blockchain Markets

In ordinary contexts, the term ‘incentive’ refers to an individual’s reason for acting towards a particular goal. Within the blockchain community, the concept of an incentive is becoming increasingly popular, although here it takes on a more technical meaning. We say, for instance, that an incentive-centered design is one that aligns the incentives of an individual with the overarching goal(s) of a system or institution.

Two immediately obvious benefits result from aligning incentives towards a communal good in this way:

(i) a user’s experience within the system is marked by consistent reward, which limits attrition rates and attracts new users, and

(ii) system designers can gather data on and easily influence their users’ behaviors by adding or modifying incentives as needed.

The result is a mutually beneficial symbiosis between designer and user alike.

Why haven’t incentives taken off?

Now, the psychological principles that undergird the science of incentive-centered design are well-understood. (Sometimes, however, the results are quite surprising.) According to both historical and contemporary economic theorizing, for example, people are primarily motivated by rational self-interest, that is, by the pursuit of maximizing their own benefits while minimizing their own costs. What’s surprising, however, is that despite the obvious nature of these conceptual foundations, incentive-centered designs have struggled to overcome a series of obstacles towards implementation.

In particular, it has proven incredibly difficult for networks to maintain scalability. As the system grows, so too must the user’s trust in the means of distributing rewards. What’s more, even highly scalable systems are worthless if they suffer from low auditability. Suppose, for example, that the system designers are unable to track the creation of different accounts by the same individual. This would allow users to maliciously exploit the incentive-reward system by artificially simulating interactions between different users in a Sybil attack. (For the etymologically inclined, ‘Sybil’ was the name of a patient in a case study on dissociative identity disorder.) These restrictions on incentive-centered markets, however, are now being seriously addressed by blockchain experts at nCent Labs.

How nCent Labs is redefining incentives

The blockchain technology developed at nCent Labs unlocks the potential of incentive-centered design. With respect to scalability, a blockchain market offers its users assurance that rewards are accessible regardless of how large the network grows. What’s more, a blockchain market centered around incentives can easily incentivize current users to recruit new users, resulting in exponential growth. With respect to auditability, too, an incentive-driven blockchain market fares exceptionally well. With incentives for compliant behavior and disincentives that penalize malicious behavior, the so-called Bitcoin incentive protocol protects designers from Sybil and related attacks. For these reasons, incentive-centered blockchain markets are the new frontier in the world of e-commerce.

Our goal at nCent Labs is to provide a sustainable platform for markets that can effectively utilize an incentive-based blockchain currency. Any business venture that can benefit from user-to-user recruitment and exposure (like employment searches) or scalable and auditable growth (like all varieties of social media, merchandise providers, and charitable organizations) should be looking towards the cutting edge of e-commerce technology. That cutting edge can only be found here, at nCent Labs, which is ground zero for the success of incentive-centered blockchain markets.

If you would like to learn more about the market breaking and creating work we do at nCent Labs please email me: kk@ncnt.io. To stay in the nCent loop, hear me tweet and join our international telegram channel.


The Success of Incentive-Centered Blockchain Markets was originally published in Hacker Noon on Medium, where people are continuing the conversation by highlighting and responding to this story.

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