by Daniel Bennett on March 15
For the first time ever, ICO funding exceeded traditional VC funding, which caught the attention of many investors and innovators. Anyone can also program their own cryptocurrencies using ethereum.
With their own value and use cases, separate from Ether, These cryptocurrencies can also be exchanged for each other, leading to the creation of many online exchanges and trading platforms, like coinbase.
Most exchanges enable you to trade fiat currency for cryptocurrencies. But there are also exchanges that enable trading strictly between cryptocurrencies as well. Demand for cryptocurrencies has caused the market cap of the entire space to swell over 800 billion dollars in early 2018.
The way our societies are governed will also be reshaped by cryptoeconomic systems. Today, we rely on centralised governments to manage our national affairs and foreign policies. With crypto economic systems like Ethereum, we can enable decentralized governments. For examples, by running elections and storing legal policies on blockchains.
This enables lawyers and organisations to create programmable legal contracts that can, for example, respond to real-world events of data points without having to rewrite the legal agreement. An example of this is the open-source legal protocol called OpenLaw that lawyers can use to define programmable legal contracts. An example would be an employment agreement between an employer and an employee that agrees to pay the employee in real-time, as in every minute, without the need for a payroll processor.
Governments are also embracing Ethereum as a legal framework pattern to create trust with its citizens. For example, the Brazilian government is taking steps to move their elections to the blockchain to create a more efficient and transparent electoral process. Understanding cryptoeconomics helps us understand why these new systems have utility.
It’s not just the software, but the combination of ideas from multiple disciplines. Cryptography, networking theory and economics that make block chains unique. These new cryptoeconomic systems can accomplish things that individual disciplines could not achieve on their own. Blockchains are just one product of this new practical science.
Since the world saw the first cryptoeconomic system from Satoshi, almost a decade ago, our understanding of the space has evolved. We started thinking about this field only through the lens of one application, which was Bitcoin, to thinking about it in terms of a generalizes underlying technology, which is the blockchain. What needs to happen now is to step back once again and view the industry in terms of unifying approach to solving problems, which is cryptoeconomics.
Now that we’ve seen some real-world examples of cryptoeconomic systems, we are ready to build some applications. Whether you are interested in Bitcoin or Ethereum development, you now understand the theory behind what makes blockchains valuable.
Thanks for reading and happy coding!