Can We Tokenise Our Community?

Does it smell like community spirit? Could we have reached investment Nirvana? In our modern world it is harder and harder to feel connected to our community. Gone are the days only our parents can recount of street parties celebrating a monarch’s birthday, or community led carol singing at Christmas. But why do we feel so detached from those living so near to us? With the increased rate of urbanisation of cities putting them in a continuous state of transience, it is logical to conclude that people are feeling as unconnected as ever within their communities. However, tokenisation has the potential to help communities find new ways to refresh relationships and rebuild these metaphorical bridges. This is where the tokenisation of Community Development Projects come in.

A Community Development Project (CDP) is a programme with the aim of improving the quality of life of the local populace whilst also catalysing development within the community. CDPs are financially intensive, time-consuming projects usually (poorly) funded by the local authority. By nature, these projects are not immediately successful ventures in monetary terms but can be in their social benefit. But what if it could be the community that took part in crowdfunding to finance the project that they will ultimately enjoy?

Let’s imagine a place called Tokenville. It has a run-down community theatre which has been closed for years due to underfunding and poor management by the council. However, ownership of this theatre could be tokenised and sold on a digital stock exchange to those living in the surrounding areas. In other words, to the people who would use the facility. At an affordable price, a couple starting a family could buy tokens and therefore participate in fractional ownership of the theatre, where they envisage spending Sunday afternoons watching the pantomime with their children. And so, they buy tokens from the exchange. All it takes is a cup of coffee over the fence and their neighbours do the same. Even the owner of the local corner shop who stocks all the best snacks wants in. In no time, all tokens are sold, and the money needed to fund both facilities is raised. These assets are now owned by the locals who will use it.

“An investment by the community becomes an investment for the community”.

This is an example of how tokenisation can connect members of the community, whilst being a wildly advantageous venture. It is an undeniable fact that something like a theatre would bring the community together. Furthermore, offering fractional ownership of these means the community — those invested emotionally — would have the power, as opposed to the council. Furthermore, by offering the tokens on a digital exchange such as Tokenise which is a world-wide platform operating 24/7, it becomes a tangible opportunity to anyone who would like to participate and potentially enhance their wealth.

“What would have been a heavily underfunded project whose investors were few and far between becomes a community-financed project whose investment attitude lies in the long-term.”

Another advantage of tokenisation is that it democratises investment because the power is put in the hands of the investors. There is no need to rely on a broker to realise your investment because the platform is designed to be easily navigated by both experienced and novice investors. Moreover, it aligns with the community’s aspiration to enhance wealth in the long term by providing a sustainable method of this while also building relationships and quality of life in the community.

This could be seen in the form of the creation of jobs within the theatre. Having raised funds from the tokens, these could mean that the facility runs on a not-for-profit model. Run by volunteers or by a couple of staff, token holders could enjoy discounts or simply know that the money they do spend on tickets for shows is being directly reinjected into the business. This gives a sense of confidence to the community who are at last autonomous in their project.

Demand can only grow as the project is funded and improved, attracting more patrons. Investment via tokenisation is considered less risky than traditional methods because it is more affordable. Gone are the days of investing large amounts of money which may remain tied up for a long period of time. This is because tokens can operate on a smaller scale at lower prices. This lower initial cost not only appeals to an untapped group of retail investors who may be just starting their investment journey, but it also portends higher stakeholder engagement than traditional financing methods as these investors are given the confidence to take investment into their own hands. And certainly, into their own wallets.

But what do you think? Is community finance changing the way communities come together to make a positive difference, or should it be left up to councils? Let’s start a discussion. Follow our social media channels and feel free to leave your thoughts in the comments.