Decentralised environments (such as Bitcoin) empower and guide people to shape their experiences. Bitcoin is a decentralised cryptocurrency that is maintained by the people that use it. The more I learnt about Bitcoin and decentralisation, the more I wondered - how can we leverage the value of a decentralised environment to empower users to drive product success in centralised environments?
Here are my thoughts!
Meet Simran. Simran is a UX designer and when she is not at work you can find her skateboarding and gaming. In her spare time, Simran started mining Bitcoin and found a whole new online community. Simran is here to walk us through how we might leverage decentralised environments to drive product success.
Environments and motivations influence people’s behaviour
Before we dive in, let’s explore how someone like Simran might be motivated to mine Bitcoin. One lens is through behavioural economics, which considers how people behave and “examines the differences between what people ‘should’ do and what they actually do and the consequences of those actions,” (Max Witynski, n.d). “Behavioural economics considers people as human beings who are subject to emotion and impulsivity, and who are influenced by their environments and circumstances,” (UChicago news).
For example, Simran enjoys playing online games. In those online games she gets boosters to sample. As the game continues, Simran eventually runs out of these ‘free’ boosters she was sampling and is now prompted to buy more.
This is the idea of reciprocity - a principle of behavioural economics, which considers “when something is given to someone, this someone feels obliged to return the favour,” (Neves, n.d). In this example, Simran would feel obliged to purchase boosters. Here the motivation is the obligation, and the environment is the game Simran is playing, both, influencing her behaviour.
Incentives motivate to mine Bitcoin
When Simran successfully mines Bitcoin, she receives a Bitcoin Block Reward which is an economic incentive. An economic incentive motivates Simran to continue mining, and therefore, behave in a certain way (see BlockChannel 2017). When Simran mines Bitcoin she is doing this within a decentralised environment and decentralised environments have rules. Simran needs to follow the rules otherwise she is considered a bad actor. These rules guide her behaviour without the need for centralisation. Here Simran is motivated to partake in mining and her behaviour is influenced by the rules of the decentralised environment.
In this example, Simran is shaping the experience. This seems to be unique to decentralised environments because in a centralised environment we would see business requirements shaping the experience which are only validated and not driven by user insights.
Bitcoin from Freepik
Other types of incentives that might motivate to mine Bitcoin
Economic incentives are a type of external motivation that might motivate Simran to partake in mining Bitcoin. However, it’s not the only type of motivation.
In Lui’s (2019) white paper, they explored internal and external motivating factors for people participating in an open-source project. While Lui cites the value of token incentives, the evidence showed that overwhelming other motivations such as community, learning and altruism play a role.
For example, for Simran the online community is important to her, and this might be what motivates her to continue mining Bitcoin rather than the expectation that she might receive a Bitcoin Block Reward. The idea of anchoring comes into play here.
In behavioural economics anchoring “is a particular form of priming effect whereby initial exposure to a number serves as a reference point and influences subsequent judgments,” (behaviouraleconomics.com). The amount of Bitcoin received as a reward will reduce over time due to the halving effect, so, Simran might initially receive more Bitcoin, but every four years this would be halved, potentially reducing the influence of Bitcoin Block Reward as an economic incentive. So, motivations such as wanting to be part of a community might be a stronger force behind Simran’s motivation to mine Bitcoin.
Bitcoin from Freepik
Incentivising user behaviour drives product success
We should take the time to understand why Simran is motivated to engage with an experience. One way we could do this is through a day in the life with Simran. This allows us to experience the environment, decisions and influences as though we were like Simran herself. It would also provide us an opportunity to connect with Simran and be welcomed into her community. This might allow us to foster an environment which empowers and uplifts people to behave in a desired way as we see in a decentralised environment.
Let’s wrap it all up
Viewing decentralised projects like Bitcoin through the lens of behavioural economics, there is a clear lesson to be learned. Users will be strongly motivated to engage with products if we offer them a way to shape the experience or the product itself.