Living Economics Experiments

I read the Nathaniel Popper piece that appeared in todays NYT, and as always it was great. The man regularly offers up the most entertaining, unbiased perspectives on the frothiest, most exciting sector since the dotcom boom and bust.

When I read something good, there are usually a few lines that I end up re-reading a few times. That way they end up sticking with me long after I close the tab or shut the book. This time was no different.

I have been thinking a lot about the simplistic power well designed cryptoeconomic incentive architectures will be able to wield lately, so my red hot embers were stoked when I read, "..virtual currencies are all living economics experiments, testing how different sorts of incentives create different behaviors."

It is precisely this economic incentive aspect of all crytpoassets - not just cryptocurrencies, but cryptocommodities, cryptotokens, and cryptocollectibles as well - that I think will start to draw more and more attention to itself and away from the ICO bubble that is starting to slide down the slope of a waning crecent moon.

Currently Bitcoin, with its own carrot and stick incentive strucure built into and around the Proof of Work (PoW) consenus mechanism, is the first, most prominent example of a cryptoeconomic incentive architecture performing in the wild, but as Nathaniel said, "...these incentives don’t always work as expected. That uncertainty is what makes it so interesting to watch — and to report on."

From out of this uncertainty I believe that there are many more low hanging fruit of much simpler and more easily approachable incentive structures that people will start to look for, adopt and actually use. A good, but still incomplete example can be found in a Dapp called Cent.

Cent offers a dead simple concept: any user with an email and ethereum wallet address responds to questions or posts.  Based on the portion of upvotes their specific response receives by the community, they receive a corresponding share of the original bounty that was attached to the prompt or question as a way to incentivize responses in the first place. Super simple, and it works, er, sort of.

But it is still early days, and much, much more is still left to come. So stay plugged in my friends.