Investment firm Multicoin bets ‘Internet Labor Markets’ will drive crypto’s next wave of adoption

For much of crypto’s history, the primary use case has been simple: buying tokens and trading them.

Now, some investors and builders believe the industry may be moving toward a different model altogether: earning crypto instead of buying it.

One version of that idea is what venture firm Multicoin Capital calls Internet Labor Markets (ILM) — networks in which users receive tokens by contributing work, resources or expertise.

“The reason people get their first crypto in the future won’t be because they bought it,” Sengupta said in an interview with CoinDesk. “It’ll be because they earned it.”

The concept has begun gaining attention, particularly in ecosystems like Solana, where a growing number of projects are experimenting with networks that reward users for performing verifiable tasks.

That shift — from speculation to earning — is at the heart of Internet Labor Markets, where users contribute work, resources or judgment to decentralized networks and receive tokens in return. If the model takes hold, Sengupta believes crypto could evolve into something closer to a global labor marketplace.

For most of crypto’s existence, participation meant converting traditional money into digital assets such as bitcoin, ether or solana before interacting with the ecosystem. ILMs flip that dynamic: instead of buying tokens first, users complete tasks and receive crypto as payment.

“The idea is simple,” Sengupta said. “There are two ways people enter crypto — they either buy in or they earn in.”

Over the past decade, most users followed the first route. But Sengupta believes the next wave will come from the second.

“If you have a system where you can issue new assets and move them around at super low cost,” he said, “you can coordinate labor globally.”

In practice, that labor can take many forms — contributing bandwidth, labeling data, reducing energy consumption or performing physical tasks tied to decentralized infrastructure.

“Someone starts a company to source something the market needs, and 50,000 people around the world can get paid for producing that labor,” Sengupta said.

The concept builds on earlier crypto experiments, such as decentralized physical infrastructure networks (DePIN) — a category of projects that has largely emerged from the Solana ecosystem — which reward participants for contributing resources, such as wireless coverage or mapping data.

But Sengupta believes the next phase goes beyond hardware.

“The system moves from just plugging in hardware to people doing more active work — contributing judgment, effort and time,” he said.

Instead of passive contributions, many ILM systems focus on discrete tasks that can be verified and paid for instantly. A network might reward users for labeling data, reporting local information, identifying bugs in code or completing real-world assignments.

The blockchain advantage

Blockchain infrastructure makes those systems possible because work can be verified and settled automatically.

In traditional employment systems, payments often require invoices, approvals and delays. ILMs replace that process with deterministic verification — confirming work was completed and paying contributors instantly through crypto rails.

Much of that work may ultimately intersect with artificial intelligence.

One example Sengupta points to is Grass, a network that allows users to share unused internet bandwidth through software installed on their devices. The bandwidth can then be used for data-scraping tasks to help train AI models.

Multicoin Capital is a crypto investment firm that manages a multi-billion-dollar token hedge fund. In January 2022, the firm said it raised $422 million for a venture fund backing early-stage blockchain startups.

“People around the world download the software, contribute spare bandwidth, and earn tokens for participating in the network,” he said.

But the model could evolve further.

“The next phase is not just scraping data, but humans applying discretion — labeling data, judging quality — in ways that only humans can,” he said.

In other words, the internet’s next generation of labor markets may involve humans collaborating with AI systems rather than competing against them.

Sengupta argues that AI could actually increase demand for distributed human contributors. As companies become smaller and more automated, they still depend on people for tasks that require judgment, verification or real-world execution.

AI may shrink core teams, he said, but it also increases the need for on-demand contributors — creating demand for systems that can source, verify, and pay those contributions globally.

If this vision materializes, crypto’s next users may not arrive through speculation at all — but through work.

Read more: Multicoin Capital co-founder Kyle Samani steps down after nearly a decade to pursue other areas of tech