Token Economy

The Bitcoin network is the first practical instance of cryptoeconomics. It produces “trust by math” rather than “trust by legal contract.”

Selected Web3-based identity solutions are: “Ageify,” “Civic,” “Edge,” “Hu-manity.co,” “Jolocom,” “Keyp,” “Madana,” “Metadium,” “NewBanking Identity,”“ObjectTech,” “THEKEY,” “Trusti,” “PeerMountain,” “REMME,” “Riddle & Code,” “Spherity,” “uPort,”“UniquID,” “ValidatedID,” and “WoTT.”

If you can’t hold state in the Internet, you cannot transfer value without centralized institutions acting as clearing entities.

Early Proof-of-Stake proposals assumed that those who have more stake in the system have a natural incentive to act in a truthful manner when validating transactions and writing blocks. It was assumed that token holders would have a natural interest in the long-term success of the network; otherwise, their stake in the system would devalue if they ... See more

However, the original Bitcoin white paper did not account for this form of collaboration amongst miners. The economic assumptions build on “simple game theory,” not “collaborative game theory.” As a result, the Bitcoin network has become a much more centralized system than originally intended. Some people therefore argue that the reality of Bitcoin... See more

Like a spreadsheet in the cloud: The ledger could also be described as a spreadsheet in the cloud. Think of cloud applications like “Google Sheets,” where everyone can access and edit a file simultaneously. But, as opposed to Google Sheets, where that file is centrally stored on the Google servers, the ledger of a blockchain network is a document t... See more

Therefore, the term “wallet” is misleading. The word “keychain” would be more appropriate, as it acts as a secure key storage, and as a communication tool with the blockchain network.

The term “smart contract” itself is a bit unfortunate, since smart contracts are neither particularly smart nor do they reflect legal contracts: (i) A smart contract can only be as smart as the people coding it, taking into account all available information at the time of coding; (ii) While smart contracts might have the potential to enforce legal ... See more

Resolve principal-agent dilemma of organizations: Distributed ledgers also provide a global coordination tool for new types of decentralized and sometimes also autonomous organizations (read more: Part 2 - Institutional Economics & Governance of DAOs).