Coinbase’s recent acquisition of Earn.com adds to the important dialogue of cryptocurrency’s application as a transactional currency — not just a speculative investment vehicle. This is something we’ve been working on at Kik for years — first, a centralized economy in Kik Points — and now a much, much bigger decentralized economy in Kin.

Earn.com is a compelling use case as it creates employment opportunities as an entry-point to the Bitcoin ecosystem. Earning the native currency of an economy as opposed to “buying-in” has significant impact on user behavior. Earning Bitcoin was largely limited to those who had the resources to sustainably contribute to the consensus protocol and capture part of the Block Reward. However, Earn.com extended the opportunity for someone to earn their way into the ecosystem.

A broader question still lingers of when cryptocurrencies will be broadly spent, not just traded. The discussion typically revolves around complex technical barriers (scalability) or complex economic barriers (volatility), but the human element often gets overlooked.

The argument that digital currencies aren’t “used” is misguided. This narrative is developed through the narrow lens of cryptocurrency as a medium of exchange in the physical world. Places like Overstock.com and Shopify offer products that allow consumers to use Bitcoin as a payment mechanism, but have minimal user adoption. Even if Amazon started accepting Bitcoin tomorrow, no one would use it outside of a few transactions for the novelty factor. Why? Because: 1) it adds friction; and 2) cryptocurrency is highly volatile. On a practical level, fiat currency works just fine for the physical world because it’s relatively stable (for much of the world), and everyone’s day-to-day lives are denominated in fiat.

The digital world, however, runs on social capital. The top apps on all of our phones are social — take a quick look at your data usage, and I’ll be willing to bet all of them are community-driven. In these digital communities we’re all providing value for each-other. For example, writing a medium post like this one. The reader (hopefully) gets some value from the content, and the writer gets an ephemeral dose of intrinsic value with every clap. It’s the same phenomenon across most digital communities: Reddit upvotes, Instagram likes, Soundcloud comments, etc.

The problem all these platforms face is how to provide explicit value to their communities that generate implicit value. Kik was facing the same problem, struggling to find ways to align user incentivizes and reward contributions to the community. Users should be compensated for the value they deliver — a tokenized economy unlocks this because the medium of exchange has guaranteed scarcity. As users create value for each other they create demand. With a fixed supply, that demand increases the value of the underlying medium of exchange, compensating the user and incentivizing more value creation. This cyclical feedback loop is the power of a crypto economy.

We all provide unique value to digital communities, and a digital sharing economy democratizes the value creation. Think of the unique value we generate like writing on Medium or moderating Reddit like “skilled” labor. Platforms like Earn.com are impactful because it’s like a minimum wage job that empowers anyone to enter the economy. Everyone goes through this same journey entering the economy — before we find the ways we generate unique value, we simply need an opportunity to participate.

Earning natively in a digital currency reduces the friction in the consumer experience. It also helps mitigate the cognitive burden, which is inherent in volatile currencies, by removing the anchoring effect to the relative fiat value and all the things outside the digital world denominated in fiat.

This begs the question — what drives the spending behavior in a digital sharing economy when the digital asset value is not easily quantified (e.g., a Medium post)? This is a question we get all the time, and yes, there are a lot of economic constructs that go into a sustainable economy. But a key factor that cannot be overlooked is the intrinsic value a user gets by spending. This may seem counterintuitive, but when there’s a social element, spending can be a very rewarding experience because you’re spending on someone in your community, and that feels good.

When the counterparty of a transaction is a faceless entity, the thought process is one of, “Is this a good deal?” Using a volatile currency is an impediment to spending because this analysis becomes very difficult, especially when the currency value is going up. But when the person on the other side of a value exchange is someone in your community, it feels good to spend. It’s why we feel good when we pick up the tab at a restaurant, or when we’re excited to see someone open the gift you got for them.

Outside of sustenance (food, shelter, safety), most of our basic needs are inherently social in nature. The real value in the human experience is derived from intrinsic motivators. There’s a reason we feel better when giving than receiving — it’s human nature.

It’s our innate need to be connected, and the digital world has unlocked connection at global scale and has empowered all of us to create unique value for each other. The key to unlock a sustainable social economy isn’t buried in complex economic models. It’s rooted in community.