Saturday, August 19, 2017

Making Sense of Cryptoeconomics

Making Sense of Cryptoeconomics

A few months ago Parker Thompson, a well known Silicon Valley VC, tweeted that "the concept of crypto-economics is stupid. It's economics. Inventing your own word is just an excuse to ignore well-understood concepts."


The term "cryptoeconomics" causes a lot of confusion and people are often unclear on what it is supposed to mean. The word itself can be misleading, as it suggests that there is a parallel "crypto" version of the whole of economics. This is wrong, and Parker is right to mock such a generalization.


In simple terms, cryptoeconomics is the use of incentives and cryptography to design new kinds of systems, applications, and networks. Cryptoeconomics is specifically about building things, and has most in common with mechanism design – an area of mathematics and economic theory.


Cryptoeconomics is not a subfield of economics, but rather an area of applied cryptography that takes economic incentives and economic theory into account. Bitcoin, ethereum, zcash and all other public blockchains are products of cryptoeconomics.


Full story at http://bit.ly/2wbJEwx


Source: CoinDesk


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