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Crypto Research

Crypto Comics – What is Tokenomics

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cryptobite

I shared my thoughts about Tokenomics and some interesting facts.

Table of Content

Some Takeaway

What is Tokenomics 

What is Anarcho-Capitalism 

Anarchism vs. Anarcho-Capitalism

Deep Dive in Anarcho-Capitalism

History of Cypherpunk  

Tokenomic = Anarcho-Capitalism

Historical Anarcho-Capitalism Nations

Future Movement

Some Takeaway

Tokenomics is a design concept to manipulate token supply and demand in the crypto ecosystem. The idea is to control the token economy, you can control the behavior. Tokenomic is decentralized, transparent, immutable, and accessible to everyone. The common 4 core benefits everyone in the crypto ecosystem recognized. But do you know where those 4 core ideas came from? Hint: Anarcho-Capitalism.

What is Tokenomics 

Tokenomics is an economical design game. It manipulates supply and demand to artificially try to change consumer behaviors. If the designer increases supply, they want to increase the demand by lowering the price of tokens and increasing the user base so that they can scale their community. Or they can increase demand by decreasing the supply of burning tokens or capping token supply to reach high demand with a high token price. Then you start manipulating ROI or Return of Investment through the supply and demand of tokens, depending on how successful your marketing strategy is, the community can grow or shrink through marketing efforts.

It is an economical strategy game that has actual valuation embedded into the system. It is fun to play when you make profits. However, everyone ignores the foundation that makes such a game work. The philosophy that backs such gameplay – Anarcho-Capitalism.  

What is Anarcho-Capitalism 

Anarcho-Capitalism advocates the abolition of centralized states. They believe that the current system is under threat by the centralized states which is a form of coercion and impediment to the development of a free society. They believe that a truly free society is one that has an absolute right of ownership over any resource so-called self-ownership. They claimed that decentralized services provide an alternative to centralized states. Particularly, such decentralized services can provide immutable and publicly available records of identity and contractual obligations. Wait a minute! This is cryptocurrency and blockchain!

Anarchism vs. Anarcho-Capitalism

The only purpose of anarchism is to reject any form of government. Anarchism by itself usually runs into violence because the ideology only gets the rejects of the hierarchy of any form. But it does raise a question about whether or not humans can self-govern without a state that is necessary for human survival. 

On the other hand, Anarcho-capitalism is to liberalize the market. It does not stop with privatizing everything but imposing an absolute self-ownership on anything you can own. 

Anarcho-capitalism is a form of anarchism in the marketplace with a twist to eliminate violence.

Deep Dive in Anarcho-Capitalism

With an idea of a self-regulating market and unnecessary evil government, anarcho-capitalism gives some clues about how society operates.

Property

Privatizing everything is a core concept of anarcho-capitalism. The government should not own anything because the ownership of property is through coercion. It should be a “first come, first served” principle in the market. To own a property, it should only be legitimate through the labor process which means if you own land, you should farm the land in order to own it. Other options are through trade or gift to own property.

Intellectual property

Anarcho-capitalism opposes intellectual property because property can only apply to tangible assets.

Contractual society

Image credit of 4 Children for Sale, Chicago (1948).: https://en.wikipedia.org/wiki/Anarcho-capitalism

It is a purely voluntary action without any potential coercion or violence. Even child selling can be justifiable (if both sides agree to do so!). We will see how this actually plays in the crypto space in the later section!

Law and Order

Only laws accept the defense of individual liberty. Otherwise, all laws acting as violence should be abolished.

History of Cypherpunk  

Cypherpunk was a secret society of bunch coders or self-claimed cypherpunk to promote the right to privacy in the internet age. One of the leading figures is Eric Hughes who drafted “A Cypherpunk’s Manifesto” which eventually led to the creation of Bitcoin. The idea was to defend the public right to use crypto and prevent the government’s attempt to control the use and export of crypto through regulatory policies. The movement was able to secure a foundational development of the cryptocurrency later and made cryptocurrency possible to be created by Satoshi Nakamoto who was also a member of the Cypherpunk.     

Tokenomic = Anarcho-Capitalism

Anarcho-Capitalism offers the economic concept of decentralization that eliminates the centralized states, imposes absolute self-ownership idea, privatizes everything, eliminates intellectual property rights, forms a voluntary-contractual society, and opposes the law, and order unless they defend individual liberty. Stay quiet on illegal activities that come along with the process (selling children) because there is nothing wrong with defending your liberty (in extreme cases).   

Historical Anarcho-Capitalism Nations

Iceland Commonwealth (930‑1264 A.D.)

The Iceland government had no executive, no criminal law, and no bureaucracy but ran on the system of chieftainships based purely on market. The law was only based on tort civil law which resulted in few victimless crimes and all penalties were monetary. 

A truly fascinated history shows how decentralized government worked:

The system relies on private entities to provide protection against violence. All violence is settled through monetary compensation. Any damage or physical harm required payment of damages up to a fixed payment such as killing a person would result in between 12.5 to 50 years of income for an ordinary man. It prevented the wealthy from abusing their power to abuse the poor. If the wealthy harmed the poor, the poor would receive enough funds to compensate him or her to become wealthy and to go against the person who harmed him or her. 

American (1830 to 1900)

The United States ran a similar Anarcho-Capitalism state system back in the grand old day. Unlike the Wild West Hollywood portrayed in the movie, the old day was a very orderly and well-respected past with fewer crimes and conflicts being presented in the society!

Modern Norway (2015 to Current)

Norway has adopted City Coin (CITY) as their sole source of the medium of exchange. A movement that created a private city-society of Liberstad that was founded in 2015. The entire city data was running on top of the blockchain under the smart contract

Future Movement

There are many possible future smart contract cities that are coming. Miami and New York are among those to receive their own City Coins that benefit local citizens. The movement will spread out and help other cities to participate in the economic reform of how cities can operate to truly benefit their local residents. 

In Conclusion

Tokenomic is a game design for the crypto ecosystem. The movement to provide city coins can benefit local citizens to participate in their city’s development. Such a movement is ongoing and to benefit the future of tokenomic that can truly be accessible to everyone.  

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Crypto Research

Bitcoin is not dead yet

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Bitcoin is not dead. In fact, the value of Bitcoin has increased in the past few months, and this is because of a lot of positive attention that Bitcoin has received. Many people are still interested in using virtual currencies to store their money. However, for these people who have been long-time Bitcoin users, the demand for Bitcoin has grown as the price has increased. If this assumption is valid, most people who plan to buy bitcoin will need to have a good reason for doing so. What if this assumption is no valid?

What is a cryptocurrency?

A cryptocurrency is a digital currency that has no primary functionalities other than being able to be stored online and exchanged for various other cryptocurrencies. Some of the most popular cryptocurrencies currently are Bitcoin, Ethereum, and many others.

Why to buy Bitcoin

There are numerous reasons to buy Bitcoin, but the most important one is to diversify one’s investments. If you are mainly investing in Bitcoin and other cryptocurrencies, then you will definitely want to buy more of them in the future. However, if you are trying to diversify your investment and purchase other cryptocurrencies, then you should start with the oldest and most successful ones. Additionally, individuals who hold positions in various financial products like stocks or bonds may also want to purchase Bitcoin. This is not a recommended move, however, as volatility in the market makes it difficult to know what will happen next. But when the economy will have a long recovery time, buying Bitcoin is not a wise move since it may take even longer for Bitcoin to recover its price.

Why not to buy Bitcoin

There are a number of reasons not to buy Bitcoin when the economy is bad. One of the top reasons is because you do not know where to start. There are many online retailers that sell everything from computer hardware to electronics, but you will probably never go that route since FTX is a prime example to let loss of trust on the exchange service. Another reason not to buy Bitcoin when the economy is bad is security. The amount of money and time to spend of securing Bitcoin is considerable. It is also likely that many criminals will target people who have money stored in a self-custody wallet.

Conclusion

The demand for Bitcoin has grown over time as more people adopt the digital currency as a store of security and money if that is the case. As more people adopt the currency, the value of Bitcoin has increased. This growth is likely due to many reasons, including the fact that many people now want to use the currency as a store of security and money. Although cryptocurrency has seen rapid growth over the past few years, it does not guarantee it will grow in the future. The demand for cryptocurrency will likely decrease in the future if people realize that it does not have any primary functionalities other than being a cryptocurrency itself.

Of course, this is no financial advice.

Photo by Silvestri Matteo on Unsplash

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Crypto Research

Invest NFT is a very bad idea

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You’re probably thinking, “but why would I ever want to deal with non fungible tokens or NFTs?” Well, that’s because there are a couple of very practical reasons why you shouldn’t. Firstly, non fungible tokens are not very good for your long-term investment. Let’s take an example. You have just purchased a 5 million worth of NFTs from Coinbase. Your long-term investment is protected for the next three years — barring some catastrophic event? But even if you manage to maintain your long-term investment for the next three years, imagine what will happen once you hit five of those years! Without a doubt, these problems increase exponentially when you have a bear market — how much can you keep NFT value? It’s quite likely that you will be broke. 

What is a non fungible token?

A non fungible token is an crypto that is not from a recognized blockchain like Ethereum. After being offered for purchase, these tokens can be easily bought and sold on any exchanges you would think. However, they are extremely liquidated and hard to sell.

Proper use of tokens

When you want to buy or sell a single NFT, you can always purchase it with other cryptos. However, NFT is just a symbol of owning something that is … useless…

Fees and charges on transactions

A transaction fee is charged when you make a payment with a cryptocurrency exchange. You can choose to pay this fee in fiat cash or a payment service like Coinbase’s Wallet.com. The transaction fee is a percentage of the amount of money you have just transferred. You can pay this fee in exchange for having access to the market for that particular crypto exchange. Some exchanges will charge you a trading fee in addition to the transaction fee. This is mainly to help cover their fees. 

What happens if we try to sell NFTs?

Creators will benefit from each transaction. That is all. Unless there are exclusive perks that follow of owning NFTs, there are no much value that you want to possess them. 

Conclusion

NFTs are not as what we expected them to be.

Photo by Ashley Jurius on Unsplash

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Crypto Research

When crypto bank is a shadow bank

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If your business goes bust, what will you do? You’ll probably need a fresh start. Fortunately, that can be a lot easier than you think. But that is not easy for a shadow bank, particularly the crypto shadow bank. Let’s explore what to do when your shadow bank goes bankrupt.

What’s the profit in being insolvent?

When your business is profitable and has plenty of cash in the bank, you can either pay your debts or use the profits from your sales to repay your creditors. If you’re able to meet your debts, you can then use the profits from your sales to pay your creditors. In some cases, you can even try to access your assets to pay your creditors. However, crypto shadow bank has illiquidity assets that unlikely can exchange to cash and pay off the debt. They are likely to go bankrupt with cash on hand and forced to sell their illiquid assets later to pay off debts.

Residual income or loss?

In general, if you’re able to show that you have a profit in being insolvent, it’s a good sign that the other parties in your business have their ear. If they haven’t, they could become targets. If you can show that you have a surplus, that is money left over from one period of activity when you were profitable and unable to pay your bills, you could be able to get your debts forgiven or pay them in full. For example, if your sales this past month were $1,000 and the total amount saved was $400, your surplus could be $100. If you can’t show this, you may have to start again from scratch. Unlike crypto shadow banks, they made huge profits when the market rose but lost quickly when the market went down. When the market goes down, they are less likely to get more funds since investors lost their appetite on the crypto.

What to do if you’re insolvent and no one will pay your bills

If you can’t show that you have a profit in being insolvent, you usually have three choices. You could either pay your bills or try to get a loan to avoid bankruptcy. You may also be able to get a special interest group on your local real estate board to readize you and make any required property inventory. You can also call a mortgage broker and arrange to buy a home.

But if you are running a crypto shadow bank, you cannot sell crypto because the market goes down faster to preserve your asset price. You cannot get another loan because likely you have highly leveraged your previous loans with high risky assets.

Get a loan to avoid bankruptcy

If you can’t pay your bills, you might be able to get a loan to make repayments on your credit cards or other debts. However, this shouldn’t be your only source of cash. For example, if you have a net worth of $5 million and your debt is $1 million, you could borrow $500,000 and have it repayments in as little as a month. Again, this is a very low-risk way to make payments.

But in crypto shadow bank, that is no an option for you.

Make payments on time

If you’re able to show that you have a surplus, you can try to pay your debts in a timely fashion. For example, if your debt is $500 and you owe $100, you could pay the full amount in a few weeks, or you could wait a month and then pay the rest. This is a low-risk way to make payments.

In the crypto shadow bank business, you cannot make payments on time and will likely go bankrupt soon.

Try private loans

You can go ask private loans with high-interest payments for the short term to offset your losses. This is not an option for crypto shadow bank again, they have already possessed high risky private loans.

Conclusion

Small businesses can weather uncertainty but no crypto shadow banks, which is why many crypto lending services keep collapsing.

Photo by Martino Pietropoli on Unsplash

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