ATARCA aims to solve the market failure of artificially scarce digital goods
Collaborators: Aalto University, Streamr Network AG, Novact, Demos Research Institute, Qbit Artifacts SL
Further information: https://atarca.eu
TX – Tomorrow Explored has joined a European consortium to tackle a central challenge in today’s data markets, the incapability of the economic system to fully leverage the potential of digital goods that are not limited by scarcity like traditional products.
The project titled ATARCA (Accounting Technologies for Anti-Rival Coordination and Allocation) aims to investigate how crypto token technologies can be used to create new types of businesses based on the replicable and abundant nature of digital resources.
The project consortium consists of five partners and is lead by Aalto University (Finland). The two-year project has been awarded an EU grant of 2.75m€ and it has kicked off in April, 2021.
Digital goods require new types of incentives
For over half a century, economists have made a distinction between rival goods that lose value when consumed, and nonrival goods that may be used repeatedly without losing value. Moreover, it has turned out in the last two decades that many information and digital goods are in fact anti-rival in nature, meaning that they are characterised by abundance and unlike rival or non-rival goods become more valuable the more they are being used.
This increase in value is due to network effects, which draw in an ever more increasing number of users to online platforms such as LinkedIn or Fortnite. The more these platforms are populated by users, the better the experience for the individual user. The cost of onboarding an additional user is close to zero. Looking beyond social online platforms, the same can be said for coronavirus tracking apps, industrial data markets or neural networks, which get better the more they are being used and fed with information.
The solution provided by mainstream economics has been to trade these abundant goods with traditional currencies, which are finite mediums of exchange, and to support their owners’ intellectual property rights (IPR) with technical and legal mechanisms, such as digital rights management (DRM). These were originally meant to incentivise the creation of digital and other intangible goods. However, the existing mechanisms create artificial scarcity and thereby fail to most efficiently support distribution of goods which by their nature benefit from sharing.
“If successful, this technology will not only help to properly organize the markets for data and other digital goods, but provide the structural fundamentals of a new type of economic growth.”– Professor Pekka Nikander, Aalto University
ATARCA tests the applicability of anti-rival tokens
To leverage the potential of sharing of certain types of digital goods, ATARCA proposes to incentivise participation through the creation of a new financial technology, anti-rival tokens. These distributed ledger technology (DLT) based tokens are used to instantiate a new ‘substance’ of quantified anti-rival value, a medium of sharing. The smart tokens will enable efficient, decentralised, market-style trading and ecosystems for anti-rival goods. Hence, they work somewhat like money, being a store of value and a unit of account, but instead of being merely a medium of exchange, they work as a medium of sharing.
Unlike traditional cryptocurrencies, such as Bitcoin, the value of anti-rival tokens will not be based on scarcity but on the underlying human relations. Their value reflects the way relationships are built over time through repeated interactions, by default benefitting all sides of transactions.
Professor Pekka Nikander from Aalto University’s Department of Communications and Networking explains that, “in ATARCA, we create cryptographically protected anti-rival tokens and test their applicability to governing industrial data markets and fostering cooperation in community driven currencies. If successful, this technology will not only help to properly organize the markets for data and other digital goods, but provide the structural fundamentals of a new type of economic growth. This will allow the societies at large to more widely explore structurally new incentives for systemic sustainability and scalable systemic intelligence.”
TX undertakes the crypto token design in two pilots
The new medium of anti-rival tokens will be tested in two different pilot projects in ATARCA. TX works in collaboration with the decentralised data network project Streamr to handle the technical implementation and Service/UX design of the crypto tokens and their front ends in both of these pilots.
The first pilot will be run in Barcelona together with local communities using the REC, a social currency that was introduced for the first time in 2018. The REC is a local citizen exchange system complementary to the Euro. In the ATARCA pilot experiment, a second dimension, that of sharing, will be added to the REC.
The second ATARCA pilot, the details of which have not been disclosed yet, will focus on an industrial use case and the development of new mediums of sharing for data driven businesses.
According to the project timeline, results from these pilots can be expected toward the end of 2022 and early 2023. The project aims to create and grow a pan-European community of stakeholders from academia, public and private sectors to examine the impact of implementing new anti-rival governance and compensation technologies. This involves outcomes such as scientific publications and events, creation of socio-economic policy recommendations, and publishing of a toolkit for anti-rival business model design.
Consortium of mutually supporting competencies
The project consortium leader Aalto University has worked previously in another related ground-breaking EU project, GMeRitS. Streamr and TX are experienced early stage commercialisers of token technology. Novact, the International Institute for Nonviolent Action, is an NGO that has initiated the REC currency and other innovative social experiments. Demos is an experienced research impact partner that oversees the dissemination of project outcomes and the EU policy interaction within the consortium. Qbit is a software development company that has implemented the current REC technology and continues to develop it further.
ATARCA has received funding from the European Union’s Horizon 2020 research and innovation programme. Any dissemination of results here presented reflects only the consortium view.
TX Podcast: Creating anti-rival tokens for collaboration and sharing in ATARCA
In this TX podcast, Dr. Esko Hakanen of Aalto University talks about ATARCA, a research project exploring how blockchain technologies can be used to create new types of businesses based on collaboration and sharing.
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