Cryptoeconomics

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Cryptoeconomics refers to the combinations of cryptography, computer networks and game theory which provide secure systems exhibiting some set of economic dis/incentives.

  • Cryptography is used to prove properties established in the past, such as account balances, identities and ownership.
  • Digital representations of economic value become possible, accessible to all, assignable, exchangeable and immune to censorship, able to be relied upon in the future.

Bitcoin example

Desired properties of Bitcoin:

  • create a chain of immutable blocks
  • maintain a state in the blocks
  • maintain a clock
  • convergence: blocks can only be added to the end of the chain, never changed or removed
  • validity: only transactions that satisfy certain rule expressions (validity predicate) should be included in the blockchain, i.e. transaction script and valid sender receiver and amount
  • clock must always be increasing
  • data availability: anyone can download all the blockchain data
  • tx availabitity: transactions should close reliably and quickly if reasonable fees are payed

References

Introduction to Cryptoeconomics - Vitalik Buterin, https://www.youtube.com/watch?v=pKqdjaH1dRo