Cryptoeconomics Definitions Part 2

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Definitions of Cryptoeconomics Part 2 [Crypto economics]

Cryptoeconomics Definitions Part 1 here



[dropcaps type=’normal’ font_size=’45’ color=’#191919′ background_color=” border_color=”]C[/dropcaps]ontinuing where I left off. The second part of the extended form of the definition can be viewed below. For those well versed in economics, the definition is very obvious. However, it can be confusing for those that have yet to have been exposed to the keywords. Picking up from where we left off,

The source of this intervention can be attributed to the non-appropriation of profits/negative externality caused by economic intelligence or agents that are participants of a representative framework/society that is fully or partially managed by a variant of (a) blockchain(s) of 2017.


The non-appropriation of profits or negative externality” is applicable to several scenarios

  • Non-appropriation: BOTH Representative or heterogeneous agents [users of the blockchain] can be a victim of hacks, phishing, or simply a fault or bug in the blockchain framework. Non-appropriation is used to mean that firms are unable to obtain the profits that they are supposed to be able to obtain.

Non-appropriation or negative externality is thus all-encompassing. Meaning that it accounts for the wrongs or weird mistakes. Examples:

  1. Cryptocurrency is stolen from your wallet due a bug in the blockchain framework
  2. Coinbase’s exact cryptocurrency cannot be tallied
  3. Cryptocurrency is lost due to insufficient gas/transaction fees [This is actually a negative externality that I believe will be fixed very soon. At the moment blockchain frameworks such as Bitcoin or Ethereum relies on the sender or the sender’s wallet provider to help determine wallet fees. Steps have been taken to reduce this problem.]

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Other Definitions

Real Technology Framework – Applied blockchain(s) technology that has an impact on the GDP and GNP of a community, normally countries.

Applied blockchain technology simply refers to blockchain technologies that have been used and proven to work. An example would be Bitcoin’s adoption of SHA256 of SHA2 and now Segwit adoption. For Ethereum, upcoming implementation of the Casper protocol. And the implementation of Ethereum itself as a Decentralized Autonomous Organization [DAO]. There are many Initial Coin Offerings (ICOs) based on Ethereum and as far as I’m aware the Ethereum Foundation has been fully supporting the development of blockchain research in general.

Impact on GDP and GNP can be said to be self-evident. As cryptocurrencies and other uses of blockchain become more popular. We hypothesize that it will reduce asymmetric information. Coupled with advances in AI technology it can result in higher productivities of workers. Cryptocurrencies itself can be used as a tool to reduce or compete with existing foreign exchange providers. I’m simplifying but competition is great for consumers in general and helps as transaction costs will be lower.

Last but not least communities are placed before countries. With much focus on GDP and GNP, there are sufficient numericals to relay the health of the country. However for cryptocurrencies to grow, it requires a positive network externality for a blockchain to be sufficiently robust against attacks on the system [I have documented this for a review/post in the future].

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There ain’t no such thing as a free lunch.

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– Pierre Dos Utt

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Economic Intelligence


Economic Intelligence – Self-aware Intelligence that is able to serve in the role of the invisible hand.



That leaves us with Economic Intelligence. In economics, there exists a standing thought that  investors/consumers act rationally in most circumstances [Although this has been proven to be highly questionable]. This foundational assumption serves as a director of sorts, leading us to “economic intelligence.” Why such a conclusion? Is it a bad assumption? Not really. An economic intelligence is self-aware meaning that it knows that it is thinking or has processes. A human being [see Adam Smith] who acts in a self-interested manner is acting in an economic way. Artificial intelligences too can be economic intelligences. As shown in the recent DOTA [a popular strategic rpg game which requires teams of 5 players] “The International” show of force. In that e-sports match, top DOTA players were asked to compete against an AI which only had 2 weeks learning period. Players with ten years of experience and grandmasters were defeated. I will elaborate on the role of economic intelligence in the future as we explore the derivatives of “true types” in blockchain economics and crypto economics.


Bringing this much closer to home, a good example would be the constant and relentless intervention by developers of crypto currencies. Rather than just coming up with the coin, most developers and their teams tend to form a firm to develop and advocate for the growth of the currency. Not unlike trade representatives of a country that advocates for more investments.



Read more about the crypto microeconomics here[/vc_column_text][/vc_column][/vc_row][vc_row css_animation=”” row_type=”row” use_row_as_full_screen_section=”no” type=”full_width” angled_section=”no” text_align=”left” background_image_as_pattern=”without_pattern”][vc_column][vc_column_text]


3 thoughts on “Cryptoeconomics Definitions Part 2”

  1. Robert Nordstrom

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  2. Robert Nordstrom

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