If the “tokenization of everything” is indeed the future, then the traditional model of trade associations and membership groups won’t be exempted from the disruption.
One such group focused on advancing blockchain technology in the public sector realms is looking to walk the walk by creating a tokenized ecosystem for incentivizing and rewarding participation within its membership ranks.
In a forthcoming white paper, the Government Blockchain Association, a global umbrella group designed to link government employees and contractors with industry practitioners and service providers, is outlining its plan to issue a token native to its organization. If successful, it will likely be the first time that a business association or trade group has taken such a step.
The GBA tokens will not be issued as a fundraising mechanism like in a typical initial coin offering, but rather they will serve as foundational infrastructure for the group’s future governance structure.
A grand total of one billion GBA tokens will be minted at the outset, and 25,000 will be allocated per quarter over a ten year period to members who demonstrably add value within the organization – i.e. speaking at events, contributing to a working group or task force, organizing conferences and meetings, creating content, etc.
“The token is being created to fuel an incentivized internal reward ecosystem for its members,” the paper, which is currently available in draft form, asserts.
Gerard Dache, president of the GBA, further emphasized that the token scheme will aspirationally serve as a means of compensating early participants who helped build the organization without taking salary. It would also be a mechanism to encourage participation by future members and potentially even serve as a medium of exchange for inter- and intra-governmental transactions.
Token distributions would be dictated by smart contracts and triggered by quantifiable objectives and metrics, such as community ratings, to allocate tokens based on the amount of value a member contributes to the ecosystem. The process would be designed to minimize risk of any human error, fraud or corruption.
Launched in March 2017, the GBA has approximately 4,000 public and private sector members spread across 80 cities globally. Its mission is to both convene players involved in the public sector blockchain space and provide education around how the technology can benefit governments and taxpayers.
Members earning tokens could redeem them within the association for consulting services, membership dues, access to sector-specific working groups, trainings, certifications, etc. New members looking to join the association or participate in special projects would have the option of paying with tokens purchased on an exchange, or with fiat or another cryptocurrency like bitcoin.
At the very least, the proposal figures to offer a stark shift away from the traditional hierarchical trade association structure, whereby members buy in at a particular membership tier and pay additional dues to join the board of directors and specific working groups and task forces.
In these models, decisions of governance and organizational direction are more often than not dictated by the members who have ponied up the most dues.
The GBA experiment will be a test run that, if successful, could serve as a template for other alternatives to the traditional model, as the tokenized governance structure would give members the ability to vote and participate on organizational decisions and policy matters of both local and global significance.
If implemented and executed correctly, the system would serve as the foundation of a globally distributed and decentralized trade association. The ultimate end goal, Dache emphasized, is to transform GBA into a Decentralized Autonomous Organization, whereby all future decisions of token allocation and organizational leadership and direction would determined by token holders.
Can it work?
The GBA’s rationale is that because it has been able to construct a sizable membership network spanning six continents over the past two years, it has already solved one half of the “chicken and egg” problem that so frequently confronts companies looking to build network-based business models built atop a token ecosystem.
Creating such an ecosystem requires not just minting a token, but incubating a network of users that is large enough to generate velocity and sustained demand for the token. Conceptually, because the GBA token would be airdropped across an existing decentralized network, it could potentially garner “utility token” status, which would allow it to be owned and traded without securities registration requirements.
That said, there are no easy solutions to addressing this distribution problem. Myriad legal questions still surround the concept, such as how securities regulators across multiple jurisdictions will treat the airdropping of tokens.
The Securities and Exchange Commission in the United States, for instance, has suggested that even airdropped tokens can potentially be securities depending on how the facts and circumstances of the case square with the Howey Test.
The cross-jurisdictional nature of the GBA’s membership base and airdropping scheme, not to mention legal questions surrounding the use and possession of cryptocurrencies by government employees and contractors will also need to be addressed.
Dache stressed that while he and his team are excited about the concept, it remains a long term play and there’s no guarantee that it can or will work.
“The GBA Token is a decade long experiment,” said Dache. “This has never been done before.”
If successful, however, the experiment could prove to be a template for how post-Industrial Era trade associations are structured, particularly as enterprises and customer bases become increasingly connected globally.
“We do know that we will learn a lot and plan to use this experiment to create new models for distributed governance. We hope that this will be a great contribution to the social-economic future made possible by blockchain technology.”