What is a Cryptoeconomic System?
Back in August I wrote about why I believe cryptoeconomic systems are valuable. I described the characteristics of cryptoeconomic systems (open-source, programmable etc.) and gave examples of important ones such as Bitcoin and Ethereum.
What I didn’t do was provide a comprehensive definition of what a cryptoeconomic system is.
The team at BlockScience has developed one of the most useful definitions I’ve seen in their paper Foundations of Cryptoeconomic Systems. They recently published a piece summarizing the paper which reminded me of how much I appreciate the definition.
“Cryptoeconomic systems are complex socioeconomic networks defined by:
Individual autonomous actors
Economic policies embedded in software, and
Emergent properties arising from the interactions of those actors according to the rules defined by that software.”
I like this definition because it is precise, comprehensive and useful.
Reading it reminds me of why I got into crypto in the first place and choose to remain involved the space despite all of the very real issues. I believe software tools that enable sovereign actors to engage in economic interactions with each other based on rules encoded in software can be a powerful force for good, if used wisely.
I encourage interested readers to check out the piece/full paper and would love to know what you think. Does seeing crypto through this lens influence your perspective or raise any questions?