# Community Economies By [reklaw](https://paragraph.com/@0xreklaw) ยท 2023-01-14 --- ### Definition A Community Economy is a group of aligned individuals who create value by pooling together their skills, resources, and knowledge in a pro forma way. ### A Timeline of the Web The emergence of Web3 has changed the way we interact on the internet, and as we enter the new decade, it is important to understand where the value of it lies. Web1 focused on digital information as its key innovation, while Web2 centered on socialization and how we interact over the web. Web3, the current stage of the internet, is all about digital identity and self-ownership. Each new version of the internet builds upon the previous one, and Web3 will do the same by emphasizing how we identify ourselves in digital communities. As our lives increasingly move online, understanding community and identity will be crucial to navigate this new digital world. It is worth noting that Web3 communities will not only be social, but also have an economic aspect. ### Communities as Economies To better understand the nature of communities in the digital age, it is important to view them not just as social entities, but also as economic ones. In this context, members of a community can be thought of as agents, with two main roles: producing and consuming. These agents fulfill the roles of supply and demand, just as in a traditional economy. By understanding the basic economics of a community, we can gain a deeper understanding of its dynamics and how they will evolve in the next version of the web. ### Web2 Communities The current version of the Web is primarily focused on consumption, with most social platforms such as Instagram, YouTube, or TikTok being dominated by viewers who consume content. The business model of these platforms is based on advertisements, which is designed to cater to this consumption-based economy. The more users consume or spend time on these platforms, the more ads they see, which is why companies employ teams of psychologists to capture users' attention. This has led to unnatural human behavior with negative impacts on society and mental health issues. As the internet has progressed, companies have realized that users do not like advertisements, and new business models have been developed as a result. These new models center around creators, who have developed new ways to directly profit from their content, such as sponsored videos, brand deals, or through their own creator brand. This puts creators at the center of the business model and represents a shift away from a solely consumption-based economy. ### Web3 Communities Web3 communities are built around digital identity and closely mimic the real world. Unlike Web2 communities, they are both consumer and producer-based, requiring the effort of all members to thrive. One common type of Web3 community is a decentralized autonomous organization (DAO). These organizations make it easy for members to contribute and identify themselves, leading to a stronger sense of attachment and purpose. This is because in a community, the more value a person provides, the more invested they become and the more purpose they derive from it. Purpose is a key concept in Web3 communities as it helps keep members feel engaged and invested in the community. ### Community Economies Building great digital communities in the future will require a shift in focus from psychology to economics. Community leaders must understand the fundamental principles and mechanisms that drive an economy in order to create and manage thriving communities. This is where "community economies" come in, which are communities built on the principles of basic economic theories and models. To drive value into these communities, mechanisms must be established. --- *Originally published on [reklaw](https://paragraph.com/@0xreklaw/community-economies)*