Brief overview of cryptoeconomics

Earlier this morning I gave the following presentation to Infosys / Finacle in Mysore, India with the Blockchain University team.  All views and opinions are my own and do not represent those of either organization.

One thought on “Brief overview of cryptoeconomics

  1. I have only recently realized this, but IMO the fact that money supply goes down over time due to private key loss is something that really should not be shown as decreasing the money supply. The reason is that, from a Rawlsian veil-of-ignorance perspective, we should assume an individual as having an average probability of losing their private keys, and so from that individual’s perspective, if the loss rate is X, and the initial money supply is M and the individual’s holdings are D, after N years the money supply will be M * (1 – X) ^ N, and the _expected value_ of the individual’s holdings will be D * (1 – X) ^ N, so the portion of the entire money supply that the individual should expect to hold is D / M, just as it would be with a zero loss rate. Loss is a tax on individuals as much as it is a supply decreasing effect on the whole system, so it’s a supply decrease in much the same way that hypothetically redenominating US dollars to $10 becomes $1, $100 becomes $10, etc, is a supply decrease; it’s really not. You can think of private key loss as a continuous ongoing redenomination plus a continuous ongoing mandatory lottery, ie. the only difference between a world with loss and a world with no loss is the mandatory lottery, which is only a second-order harm inflicted on everyone proportional to their degree of loss aversion.

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