The Ethics of Experimental Crypto-Economics
We need to talk about unusual tokenomic practices
The crypto landscape is filled with a myriad of experimental, or at least fringe, economic concepts. There are many projects that employ deflationary protocols, issue elastic supply tokens that change their circulation to reflect their demand, and offer non-collateralized loans lasting for mere seconds.
This is not inherently a problem. In fact, it is a strength of the industry. The fact such ideas exist, and are given breathing-room to develop, is why blockchain technology is at the bleeding edge of FinTech. But these ideas do require some examination. It goes without saying ideas like the ones listed go against standard economic practices (the likes of which are taught at universities and repeated by governments on a consistent basis).
This is not to say these are bad ideas, but considering how they go against the grain, it is worth critically analyzing these ideas, and exploring why they are so revolutionary, and what their pitfalls may be.
Now, I will not be examing either the merits or the pitfalls of any specific economic practices found in the crypto industry. I, unfortunately, do not have the knowledge to do so. What I will be doing instead, is answering one specific question:
Is it ethical to develop crypto projects that utilize experimental or unusual economic ideas?
This might seem like an odd question, so I’ll break it down.
The reason I have framed this as a moral question is because the crypto industry is made up of a significant amount of working-class and low-economic investors. This is especially true in the UK where a huge quantity of retail investors have a yearly income of below £20,000.
All financial activity is moral activity, as money is a survival tool. This is especially the case for low-economic individuals who do not have the privilage of frivolous spending.
The financial status of investors is significant because, if a project is utilizing an experimental economic practice, then there might be a higher chance of failure. It is hard to examine just how likely a project is of…