Category: 4. What are Tokenomics?

ICOs failed because they fuelled bad behaviour from both entrepreneurs, with exit scams and untested ideas, and from investors, encouraging short term speculation, rather than actual usage. What has emerged are more innovative ways to incentivise ownership and usage of tokens – as intended – that learn from these mistakes. One approach to launching is…

Another important consideration of tokenomics are the incentives users have to play some role in a cryptocurrency’s function. The most explicit reward is that provided for processing new blocks of transactions, which differs depending on the consensus method used; the two main methods having already been introduced. Mining (PoW) – Being rewarded for processing transactions by…

Bitcoin was the first cryptocurrency, created in 2008. We don’t know who created it, we just have a pseudonym, Satoshi Nakamoto, who disappeared soon after it was up and running. Their last public communication was in December, 2010.  The creation of Bitcoin is sometimes called a Sacred Launch, because of the manner in which it started…

Another factor that further muddies the waters around supply distribution is the number of coins that can never be spent because their Private Keys are lost, or they have been sent to a burn address.  Though there are some well-publicised cases where significant amounts of bitcoin have been lost, it is impossible to put an exact figure…

Whereas the Supply Schedule tells you what the currently Circulating Supply is and the rate at which coins are being created, Supply Distribution takes into consideration how coins are spread among addresses, which  can have a big influence on value, and is another important part of tokenomics. Given cryptocurrencies like Bitcoin are open source, this…

Bitcoin went live in January 2009,  based on a set  of rules – the Bitcoin Protocol – that included a clearly defined supply schedule: New bitcoins are created through Mining. Miners compete to process a new block of transactions by committing computing power to solve a mathematical puzzle. They do this by running a set algorithm…

So much about the crypto ecosystem is novel and disruptive, including its vocabulary, which features entirely new words, invented to describe entirely new concepts. Tokenomics is a great example. It is what is known as a portmanteau, a word that blends the meaning of two other words – tokens and economics. It fills the empty space…

What you’ll learn An understanding of what tokenomics measures The role of supply & distribution in tokenomics Bitcoin & Ethereum’s tokenomics How incentives relate to tokenomics