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Cryptoeconomics of microeconomics

[vc_row css_animation=”” row_type=”row” use_row_as_full_screen_section=”no” type=”grid” angled_section=”no” text_align=”left” background_image_as_pattern=”without_pattern” css=”.vc_custom_1463146108811{padding-bottom: 20px !important;}”][vc_column offset=”vc_col-lg-offset-1 vc_col-lg-10 vc_col-md-offset-1 vc_col-md-10″][vc_column_text][dropcaps type=’normal’ font_size=’45’ color=’#191919′ background_color=” border_color=”]M[/dropcaps]icroecnomics is a branch of economics that attends to the problem is distributing scarce resources to their best use, to this end microeconomics looks at this issue from the perspective of individuals and firms. Microeconomics further explores other incentive issues that individual and firms face at certain points of time. Factors such as budget constraints and models help us to understand the allocation of resources. Microeconomics also provides the foundation for macroeconomics and trade theories, parallel to the developments made in microeconomics is the development of game theory.

The first mention of Game Theory has been credited to Charles Waldegrave of 1713 (Bellhouse, 2007). Since John Nash put forth his ideas on game theory, it has revolutionized several main subjects. Industries such as political sciences, economics, computer science, network communication were influenced strongly. In all of these fields. Game theory introduced certainty in an uncertain scenario, mathematical economics benefitted from advances in game theory.

It is in my normative opinion that micro-economics showed us that the little things in life matter if economists cannot do the small things right. The large (macro) models will never be right. Developments are continually made in the field, beneath this facade of rigorous math is the need for assumptions.[/vc_column_text][/vc_column][/vc_row][vc_row css_animation=”” row_type=”row” use_row_as_full_screen_section=”no” type=”grid” angled_section=”no” text_align=”left” background_image_as_pattern=”without_pattern” css=”.vc_custom_1463146163185{padding-top: 50px !important;padding-bottom: 44px !important;}”][vc_column width=”1/3″][vc_single_image image=”63″ img_size=”full” qode_css_animation=””][vc_separator type=”transparent” thickness=”0″ up=”0″ down=”30″][/vc_column][vc_column width=”1/3″][vc_single_image image=”64″ img_size=”full” qode_css_animation=””][vc_separator type=”transparent” thickness=”0″ up=”0″ down=”30″][/vc_column][vc_column width=”1/3″][vc_single_image image=”65″ img_size=”full” qode_css_animation=””][vc_separator type=”transparent” thickness=”0″ up=”0″ down=”30″][/vc_column][/vc_row][vc_row css_animation=”” row_type=”row” use_row_as_full_screen_section=”no” type=”grid” angled_section=”no” text_align=”left” background_image_as_pattern=”without_pattern” css=”.vc_custom_1463146184322{padding-bottom: 70px !important;}”][vc_column offset=”vc_col-lg-offset-1 vc_col-lg-10 vc_col-md-offset-1 vc_col-md-10″][vc_column_text]It is thus essential that cryptoeconomics exist as a predictive subfield within economics. Forward looking and willing to incorporate modern game theory.

Why does Cryptoeconomics exist?

  1. To bring macroeconomics into Fintech/Blockchain: Incentives exist not simply in game theory, but it must account for macro variables. Cryptoeconomics exists to bridge the game between programmers and influencers in the blockchain industry in order to align individual, firm, and macro interests in order to better the framework. It can be tough for individual blockchain programmers and executives to notice that blockchain frameworks can have a real effect on the real economy. Most blockchain operators cooperate for several reasons such as increased users for both firms, or practical beneficial benefits such as increased profits.
  2. To reconcile econometrics to be forward looking. Currently, econometrics exists as a backward looking field. It fulfills functions such as confirmation of theories proposed by leading researchers and experts in the field. Failure to reconcile advances of the fin-tech, and the rise of machine learning can cause even more volatility in world markets. It has been almost a decade since the Great Recession of 2007/2008, yet global economies have yet to display expected recovery. Although some macroeconomists have commented that the internvention by Bernanake actually kept the “bubble” going instead of allowing the market to experience cleansing thus we are in this state. Macroeconomists have been puzzled at the current conditions of the economy and are urgently furthering research through DSGE, which have been displaying the impact of shocks going forward. Destruction of bank balance sheets caused a credit crunch which required a review for DSGE. How then, is econometrics still backward looking? Cryptoeconomics by reducing asymmetric information can bring about much-needed changes hopefully to econometrics.
  3. Cryptoeconomics can account for new theories that have already been decided by programmers. The field of economics has always been the main influence of economies and finance globally. Central bankers and politicians have always heeded the experts of their day, recall the amount of influence that Keynes, Hayek had on their political patrons. This is about to change. It cannot be denied that most economists will not be the ones writing the codes that will form future blockchains. Increased use of blockchains and developments in fintech will reduce information asymmetry and increase productivity. If economists are unwilling to account for the advancement in order to.

 

One great example is the guidance provided by Buterin of Ethereum. He has informed that once the Casper protocol has been sufficiently tested to satisfaction then Ethereum will be shifting from Proof of Work to Proof of Stake. How will this change (fork) affect individual users in the system? Are incentives different when we imagine incentives in a blockchain framework? Will they be 100% the same as per individuals and firms in the real economy?

It isn’t hard. To know that this parallel persona that is starting to grow will contain human traits. After all, each online presence is controlled by a human being. What happens if machine learning (as shown by OpenAI and several other firms) can be more capable than a human being? Can we agree that Artifical Intelligence [AI] is rational? How will this then affect asymmetric information? Will humans be able to lie to AIs?

 

 

 

[/vc_column_text][/vc_column][/vc_row][vc_row row_type=”parallax” parallax_content_width=”in_grid” text_align=”center” background_image=”66″ full_screen_section_height=”no”][vc_column][vc_separator type=”transparent” thickness=”0″ up=”0″ down=”177″][icons icon_pack=”font_elegant” fe_icon=”icon_quotations” size=”fa-lg” type=”square” custom_size=”45″ custom_shape_size=”40″ border_radius=”100″ border=”yes” target=”_self” icon_color=”#ffffff” icon_hover_color=”#141212″ background_color=”rgba(255,255,255,0.01)” hover_background_color=”#ffffff” border_color=”#ffffff” border_width=”1″][vc_separator type=”transparent” thickness=”0″ up=”0″ down=”35″][vc_column_text]

You can see the computer age everywhere but in the productivity statistics.

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– Robert Solow

[/vc_column_text][vc_separator type=”transparent” thickness=”0″ up=”0″ down=”174″][/vc_column][/vc_row][vc_row css_animation=”” row_type=”row” use_row_as_full_screen_section=”no” type=”grid” angled_section=”no” text_align=”left” background_image_as_pattern=”without_pattern” css=”.vc_custom_1463146237211{padding-top: 74px !important;}”][vc_column offset=”vc_col-lg-offset-1 vc_col-lg-10 vc_col-md-offset-1 vc_col-md-10″][vc_column_text]In the near future, there would be a revision of current commonly accepted economic theories immediately as advances in financial technology and computer science are improving at such a tremendous speed. An influential economist once commented that we aren’t able to model well because of technology limitations. He was right.

 

 

 

 

 

 

 

References

Bellhouse, David (2007), “The Problem of Waldegrave” (PDF), Journal Électronique d’Histoire des Probabilités et de la Statistique, 3 (2)[/vc_column_text][/vc_column][/vc_row]