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Making Sense of Cryptoeconomics

The Roman Aqueduct at Segovia, an early marvel of engineering

1. What is cryptoeconomics? Bitcoin as a case study

Bitcoin is a product of cryptoeconomics.

2. How does it relate to economics more generally?

The term cryptoeconomics can be misleading because it suggests a comparison to economics as a whole. This is part of what leads people like Parker to dismiss the term. Economics is the study of choice: how people and groups of people respond to incentives. The invention of cryptocurrency and blockchain technology does not require a new theory of human choice — the humans haven’t changed. Cryptoeconomics is not the application of macroeconomic and microeconomic theory to cryptocurrency or token markets.

3. Three examples of cryptoeconomics

There are at least three different kinds of systems being designed today that could be called “cryptoeconomic”.

Conclusion

Thinking about the blockchain space through the lens of cryptoeconomics is helpful. Once you understand the idea, it helps to clarify many of the controversies and debates in our industry.

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