Bitcoin Cryptoeconomics Still Within Grasp of theĀ Future

By Michael K. Spencer

With a declining Bitcoin price in November, 2018 we have to admit perhaps we are at the end of the altcoin gold rush. This doesn’t mean that the decentralization motive or the future of cryptoeconomics is thwarted, but it has to be better regulated.

The SEC chairman suggests that a Bitcoin ETF wouldn’t pass easily due to a risk of manipulation. Blockchain groups now exist at every major university in the world and the number of people who own some kind of crypto digital asset continues to rise.

The idea of cryptoeconomics becoming embedded in the 5G video and voice-AI internet is sort of inevitable. But what is cryptoeconomics?

Ethereum developer Vlad Zamfir says that cryptoeconomics is:

“A formal discipline that studies protocols that govern the production, distribution, and consumption of goods and services in a decentralized digital economy. Cryptoeconomics is a practical science that focuses on the design and characterization of these protocols.”

The economics of decentralization might help humanity through a phase of rapid automation and job disruption and role uncertainty for millions of people on the planet Earth. From stablecoins in the developing world and in places where inflation will get out of control, to how blockchain will power the Cloud, the use cases of a more decentralized world are obvious. Humanity needs to make a quantum leap in governance.

Even if crypto in its early stages was fraught with fraud and corruption, the idea of Bitcoin has already changed the world forever. Millions of developers and software engineers globally recognize what it means. Thousands of people in Finance and entrepreneurship are busy working and pivoting to what cryptoeconomics will become in the real world in five, ten or twenty years.

Cryptoeconomics goes beyond just this idea of a token incentive economy. Cryptoeconomics could be implicated in how things like a universal basic income can be implemented and wealth inequality can be corrected to save capitalism and balance politics for a new era of ethical leadership.

In October 2008, an unknown man/woman/group calling themselves Satoshi Nakomoto released a paper which would lay the foundation for bitcoin. From the origins of economic uncertainty come new systems whereby trust and new levels of security and agreement in a more globalized world can be achieved. Public blockchains speak largely about ‘consensus’ on new lines of how communities can evolve, so Bitcoin as a social construct isn’t just about blockchain or decentralization, but largely about how human beings can improve trust in systems with a focus on better governance through consensus and transactional transparency.

If a blockchain is immutable to be a real blockchain (i.e. EOS is not a blockchain), the future of uncertainty leads young global citizens to make new choices that steer the planet in another direction. This is what is happening to capitalism and governance, where decentralization and blockchain ultimately have the greatest capacity to impact collective change.

Cryptoeconomics is then the implementation of a more decentralized future. It does not matter what form it takes so long as it is true to the new systems and values it represents. Only valid transactions should be allowed. The tampering and fraudulent transactions must not be tolerated but eliminated. Bad actors must be penalized. Cryptoeconomics is therefore an anti-corruption movement. The elitism of technology companies and wealth inequality is the anti-thesis to decentralization and crypto-capitalism.

Cryptoeconomics must be tethered to and converge with the key exponential technologies of the future: quantum computing, machine learning, the Voice-AI interface, 3D printing, Biotechnology and whatever other important changes to human life occur from the intersection of technologies. Payments in a digital asset means a customer-centric experience of society, no matter where one is living or moving to. It does not matter if Cryptoeconomics involves Bitcoin or Ether or something else as a primary form of transaction, so long as it’s not only mobile payment apps such as Apple, Alipay, Amazon Payments or WeChat.

As Bitcoin mining and ICOs as we once knew them die, new forms of cryptoeconomic activities will take their place. STOs and the race to scalable public blockchains are a good example. The rise of digital assets will mean an Enterprise and Cloud adoption of alternative currencies. In-app experiences will become more meaningful, incentivized by new forms of value and assets that did not exist even five years ago.

Where the least decentralized solutions such as XRP (Ripple) and EOS might find mass adoption in the old world, cryptoeconomics is foundation for the new world. A world where central banks will usher in digital forms of their fiat money. Blockchain on-boarding is taking place in all aspects of society now in a period of blockchain consolidation, circa 2019–2024. These five years are critical for the formation of new standards for the future of cryptoeconomics. Decentralization in its true form may take decades longer to unfold. The world isn’t ready for some aspects of cryptoeconomics.

The security compliant token, or a Bitcoin ETF are symbolic of the market’s gradual regulation of cryptoeconomics. In 2018, the use case of stable coins took on considerable momentum as well as several basic income experiments that are driven by cryptoeconomic principles. I had the opportunity to get to know some of these projects.

The evolution of Ethereum is also driving daily developer opt-in. Blockchain is still a matter of software where the average revenue per developer (ARPD) is still relatively low. The race to scalable public blockchain is one of the most exciting things in the maturation of cryptoeconomics. It hardly matters how bearish or bullish the digital asset market is, what matters is how cryptoeconomics as a macro construct is evolving.

Even as South Korea tests a blockchain voting system, how digital assets could impact industries and business models could rapidly transform what we consider the ‘new normal’ to be. China can ban Bitcoin mining, America can slow down the regulation of digital assets, but cryptoeconomics is a global movement with many undercurrents and a lot of potential for innovation, the sharing economy, social good and the formation of consortiums and communities, and the creation of new jobs and use cases that go beyond even what the most optimistic blockchain advocates ever dreamed of.