How does tokenomics or token economics of blockchains work?
Hello everyone!
Personally I think tokenomics is absolutely fascinating, and is a massively important part of the world of abundance. At the moment a lot of value within the economy is driven by scarcity. If something has value already, people will want it more if access to it is restricted. I’m sure it’s a left-over impulse from our past when all of humankind was just trying to survive day to day.
We can flip that scarcity-driven model and provide a world of abundance and one of the ways we could achieve that is by using tokens for everything. Blockchains can provide unique and provable tokens for almost any situation, but they still need to be backed by something to give them value. You could argue that the money in your wallet is really just a government token.
What is tokenomics?
In my mind it’s the attributes of a token that give it value.
Your Hive-Engine wallet holds some good examples of this. I have half as many LEO tokens as I do HIVE tokens, but they’re currently worth more. I have a similar amount of SPORTS tokens and they’re not worth much at all.
Bitcoin and Ethereum have absolutely rocketed up in price over the last two months while XRP has stayed pretty much the same.
I think there are lots of attributes that contribute to a token’s value.
- How easy is the token to get?
- How easy is the token to spend?
- What can you spend it on?
- What are the benefits to holding the token?
- How much speculation is there on the token?
We see lots of conversations in both the cryptocurrency world and the stock market world about fundamentals…. and how often it’s they’re not related to sudden rises in price. To use Gamestop and AMC as an example, those stocks have dramatically risen in price this week because of retail investors fighting with short-sellers, not because these two companies have released new products or services.
That said, the fundamentals are crucial to a token’s long term success, and @andracy’s insights into this area are absolutely fascinating. He turned my thinking around from taps and sinks (inflow and outflow of tokens) to something a lot more meaningful and important…
Tokenomics of blockchains
This chat is available on Cinnamon.video:
Previous blockchain content
If you’re interested in previous chats with Andrew about Koinos, check out these posts:
Enterprises and Public Blockchains
Feeless Blockchain Transactions – How does it work?
Token distribution – Mining KOIN and Proof of Work
Integrating with Koinos
Smart Contracts – what are they?
A conversation with Andrew from the KOINOS Group
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