Why Cryptoeconomics is Important

There are two very similar words used within the cryptosphere: cryptonomics and cryptoeconomics.

Both words are contractions of cryptocurrency-economics but mean slightly different things. Some confusion can arise as cryptonomics is the shorter word and hence by the law of parsimony is often used as an umbrella-term.

Strictly speaking, cryptoeconomics refers to "the combinations of cryptography, computer networks and game theory which provide a secured and decentralized system exhibiting some set of economic disincentives" and incentives [ref]. It is thus the construction of a digital economic system. Cryptoeconomics is hard.

In contrast, cryptonomics tends to be more about the relationships between cryptocurrencies and the broader financial system. This is also interesting but is not my main focus.

Although a few years old, if you haven't seen this presentation it is worth watching Vitalik's overview of how to construct a cryptoeconomic system.

Cryptoeconomics is harder than traditional economics. The reason for this is that traditional economics can assume human behaviour as a given, whereas a cryptoeconomy must encode every interaction and must also take into account off-chain relationships.

This is not the place for a long analysis on the coming synthetic economic disaster that is about to be unleashed on billions of unwary humans (or maybe it is), nor the monstrous virus con to deflect blame for this collapse away from the banksters and psychopaths. The great reset will turn you into an indentured slave - you will own nothing. Part of this reset is to create central bank cryptocurrencies so that you will not even have the freedom to buy lunch without it being traced and logged.

The point I'm coming to regarding cryptoeconomies is that there is still not very much research done on them - the research that is ongoing tends often to be hidden. The Graphene DPOS system is one of the major attempts to construct a coin with an internal economy - never mind what the markets think. The coups that have taken place on such systems must be taken as warnings that things need fixing, especially between network and governance, but they must also be seen as the tragedies of success - such chains are worth taking over! Look around - look deeper - try to understand what is really going on.

So, back to cryptoeconomics, the study of digital economic systems, and the hard problem of making such a system work - algorithmically. Playing around with the same parameters, the same curves that bend this way and that, the same division of minted coins, the same ideas that ultimately fool the majority and enrich the minority - we have seen them all fail.

They have failed, and continue to fail, precisely because the systems are not flexible enough nor responsive enough to actions taken. People want stability but they also want profits; they want fairness, but not towards bad behaviour; they want simplicity that is prone to hijacking. Do you see the problem? The biggest problem is that most people don't really understand the economy around them.

The world economic system has been distorted into a monetarist game conducted by private central bankers that has extracted much of the planet's resources - the real resources of land, energy and human life. Having used money as the accountancy unit for this planetary enslavement, the economic value of that money has become negligible. There is even no need to keep the old-money-game going when you control almost everything - full spectrum control is not just a military term. Hence the aim is to trash most existing currencies and replace them with digital, controlled and monitored units of activity. You can't buy anything with long-term value, only consumables to keep you alive and entertained, so you don't need your cash to be pegged to anything real, you merely need your units accepted by other people. Sound familiar?

This is the future you are heading towards. I dare not use the psyop trigger word "inevitable" as that is meant to be disempowering. Actually, maybe I should use it: your slavery is inevitable. How does that sound? Look around at all the things you can no longer do.

A cryptoeconomy thus needs to be flexible in its actions, responsive to such actions and robust to hijacking. Can it be done? Well, apart from my posts specifically about Blurt and its economy, I shall also publish short pieces about the research that does exist. This is not just about economics and game theory but also includes system designs, social networks and psychology, even delving into how humans really function at the level of biophysics. If nothing else, it will illustrate how many different areas of science are used to inform my own judgments about what may be needed within a functioning cryptoeconomy.

Many initial crypto disruptors have been emasculated and ghettoised. This is the second wave; I hope we have learnt from the first wave. There isn't much time left to get it right.