Jul 11
Pragmatic Crypto
New markets do not emerge, nor do they appear. New markets are created when firms correctly sense (by accident or by design) a latent need and communicate their solution to that need - Handbook of New Institutional Economics.
As an enabling and disruptive technology blockchain has created new economic models that can offer financial inclusion for traders across the world, allowing them to fully participate in the global economy by providing a safe, affordable solution to cross-border transactions.
Why Decentralization in Blockchain matter?
Apart from democratizing the power, decentralization creates a ubiquitous network that can potentially solve problems more efficiently than traditional centralized systems.
Blockchain use cases are not just limited to moving money, they can be a wide variety including peer-to-peer file storage networks (FIL), wireless infrastructure networks (HNT), video streaming (THETA), renting cloud storage (SC), a bridge between real-world and blockchain (LINK) or providing means to transfer assets between different networks (DOT). These utility tokens enable participants (producers and consumers) to earn income for their resources invested thus enabling a new economy aka Tokenomics.
Tokenomics = Token + Economics
Tokens are the primary incentives we come across in our daily lives. ex. airline points, loyalty points from the grocery store, play pass cards, etc. We always apply economics to analyze the token values and sometimes we spend more to gain more tokens. With the evolution of blockchain, the meaning of a token economic model contains the same concepts, but it is applied in a different context.
Success Rate of these new models
Depends on various factors including how strong and feasible the business case is, adaptability of the token, developer community behind the network, legality, regulation, etc. While these new models are still evolving one should be motivated enough to be a part of the continuously evolving, and intriguing, world of decentralized blockchain technology.
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Disclaimer: You should not make any decision, financial, investment, trading, or otherwise, based on any of the information presented on this blog. This blog is my personal; opinions are my own.
References:
Anderson, E., Gatignon, H. (2008). Firms and the Creation of New Markets. In: Ménard, C., Shirley, M.M. (eds) Handbook of New Institutional Economics. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-540-69305-5_17
