Mindblown: a blog about philosophy.
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3. Tokenomics and Incentives
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…
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Bitcoin`s Sacred Launch
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…
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Lost or Burned Coins
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…
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2. Supply Distribution
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…
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1. Supply schedule
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…
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What are Tokenomics?
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…
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What you`ll learn
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
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Going deeper with metrics
The metrics we’ve introduced represent the most commonly used examples. They are freely available for anyone with the know-how to harvest from Bitcoin’s blockchain, or any other open blockchain for that matter, but are just the tip of iceberg in terms of potential measures of Bitcoin’s health. For those that really want to explore data…
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Measuring Usage
With the means to establish Bitcoin’s scarcity and security, we can essentially measure its effectiveness as sound money. That information, is however, meaningless unless we know whether anyone is actually using it. Given its open source nature, we can access a number of useful usage metrics: Number of Blockchain Addresses This is the raw measure of…
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Security and Hashrate
There is no point in a scarce money that isn’t secure. The role Miners play is not only to ‘issue’ new bitcoin, they also secure the network and that security can also be measured in an objective way, which is crucial – it is known as Hash Rate. Hash Rate is the estimated computing power…
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