random cryptocurrency / cryptoeconomics thoughts #3 - Kauri
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POSTED 20 May 2019 02:03

random cryptocurrency / cryptoeconomics thoughts #3

cryptocurrency
ethereum
cryptoeconomics
blockchain
bitcoin
AUTHOR
blacque64

The below is ungroomed, thinking out loud, a collection of thought bubbles written as a messy tangle. It has not been processed for concision/to make it easier to read. Patience and indulgence is required. There is not a sequential flow, paragraphs are ordered randomly. No effort was made to format for easier reading/viewing.

tl;dr I know you just want the money shot:

  • incentive structures matter, crypto’s hard-encode them

  • Crypto codebase is so smart, it will become a person at law who thinks for itself and demands its own rights Volatility and shifting value base of cryptoeconomic factors. We may know that “Nature abhors a vacuum”; perhaps we might soon need to accept that “cryptocurrency/cryptoeconomics abhors standing still”. It may be the case that cryptocurrencies never settle on a fixed internal cryptoeconomic rule-state for them self. There may be an endless arms race as cryptocoin codebases continuously reinvent and adjust their encoded cryptoeconomic rules. We may never reach a SettleCoin, one whose codebase — and thus cryptoeconomic functional behavioural envelope — is stable, considered final, deterministic, immutable. Arguably, humans assume that certain principles of homo economicus are stable, settled and programmatically/axiomatically expressible with certainty. It may be the case that this desire for, or achievement of, stability in our preferred end-state cryptocurrency has to be surrendered, that we might never again be able to plan ahead for how we predictably expect our economics to act in the field. As AI-driven blockchain codebases hunt around for optimal executional states, they may stomp repeatably on our craving for predictable stability of their cryptoeconomic aspects. ICO’s and tokenisation are the first sample species of a new branch of the cryptoecology. The notion is that old world structures, such as The Company, were useful because they parcelled up collective efforts into a vehicle that then exhibited properties that we judged to be socially valuable, however ICOs, DAOs, ITOs, forks and DACs might be the new (and perhaps dominant) way that humans reveal, manage and instantiate otherwise hidden value.
    This concept might find a trivial voice for instance as an example where more famous or well-known members of society take note and seek to co-opt this same revealment mechanism: Beyoncé might tokenise herself so that willing participants can buy her token and thus signal her cryptoeconomic value. Let her fans tokenise aspects of her artistic stylings that they ascribe value to.
    The hoped-for outcome is that this drive to tokenise otherwise hidden — or hitherto-hard-to-quantify — value will result in everything, however intangible, that we like/need getting tokenised in some way. Humans will want, or otherwise accidentally end up with, a system that comprehensively reveals the value of all hitherto hidden things-of-value. Tokens will more closely and more broadly express our homo economicus preferences.
    Cryptoeconomics may thus become a zoo of ‘tokenised everything’ — every infant child gets a suite of token types to track its socially ascribed values throughout its life along multiple dimensions.
    When everything we reckon can have a token so that we can better keep track of our related preferences, then this suggests that humans have a reliable sense for how to decide and clarify the value each thing has to them. Just how much is your child worth, in tokens? Can you be objective there?
    Broad tokenisation of everything also implies that social harms and social unorthodoxies will be outed. Do we have the social intelligence to decide how much to slash the token or validator stake of a warlord or gangster who harms our children, suburb, tribe?
    This ability to adjust values and token prices destroys certainty. Make one wrong step and the token market might decide to slash its valuation of your token on the DEX, beyond what your model calculated as possible. Large automakers decide whether to spend to improve/correct their airbags based on what the court case payouts might be from the class action lawsuits: maybe tomorrow’s criminal will decide on their crime proceeding to action based on what they hypothesise their token’s price dump might be.
    The human brain is a forecast making machine, constantly virtualising future events and comparing incoming data to the virtualised forecast. When tokenisation destroys certainty and replaces it with instant market-driven revaluation risk, how will human behavioural patterning adapt to this change? Cryptoeconomics becomes the market-maker that aggregates and continuously reprices risks that different groupings and cross-sections of society ascribe to various aspects of their world and lives. FloodCoin goes down, NorthKoreaNukeCoin goes up, DaughterGettingMarriedCoin forks. To date, cryptocurrency has inverted the internet’s model. In the internet, TCP and UDP own nothing and arguably are worth almost nothing (you might conceivably one day convince the world to agree to replace the TCP/IP suite with some complete alternate protocol stack/internetworking model; RINA or rfc2549, anyone?), whilst Facebook and Amazon, at the ‘internet application’ layer, arguably cornered almost all the attention/money/power. Contrast this to the cryptocurrency ecology: the protocol is where all the money and power is parked, whilst the application space on top is yet to heavily monetise, TheDAO and CryptoKitties notwithstanding. Will dApp tails one day rise up to wag mainnet dogs?
    Having the value locked into the decentralisation/protocol layer and not the application layer may yet prove to be a vital foundation to retain, to ensure cryptoeconomic goodness maintains. As a society, we may need to define which functions and benefits are to be kept common and essentially provided for free to all participants and peer entities, and how commercialisation, e.g. via dApps, can ride on top. Should we leave this to chance? Bitcoin Maximalists and Ethereum Maximalists may not yet realise they are indulging in a version of My Religion Is Better Than Your Religion, or my children and smarter/more beautiful than yours. Yuan, USD and Euros are engaged in the same beauty pageant, vying for the winning sash. Mother nature via Darwin’s genetic engine room evolved many species, and invented the whole edifice of speciation, rather than try to converge to a single, exclusively resultant individual. Like religion, Maximalists will find them self overrun by slavishness to a master that dictates their actions to them: your cryptocurrency-fuelled self driving car will decide for itself which route to take, which time of day to travel at and other self-optimal decisional aspects, perhaps to your detriment. Humans who continue to behave and think in Maximalist terms will need to decide which cryptocurrency church they will allow to ‘own’ them as faithful parishioner, but then surrender once a member of that church. Should the combined mass of the cryptosphere (by inaction) allow evolution to continue unpoliced, with its likely drive to converge down to a single ‘hyper evolved, superior’ coin that predominates (AmazonBezosCoin), or should we take deliberate stewardship steps to ensure ongoing speciation/minimum species quora? How discrete does this stewarding action need to be? All the dynamics of cryptoeconomics and cryptocurrencies present a clear threat to the viability of existing megarich entities/persons: the whales. Their current superior wealth and positional pre-eminence depends on certain factors remaining so, and the disruption to those givens that cryptoeconomics and cryptocurrencies present will be resisted fiercely by this broad family of behemoths. Expect destructive resistance battles as these gargantuans fight against the perceived threat, in a forlorn effort to stave off/infanticide the inevitable. The carnage will be extreme, and bystanders will get rekt. The costs of battle will be externalised to weaker hands and ‘collateral damage’ bystanders. To what degree can cryptocurrency stakeholders ask their dev teams to build in mechanisms that protect against whales’ actions that harm us? Is this a function the codebase should enact/police/censure? Cryptoeconomics and cryptocurrencies might be viewable as being The Battle of the Peers: even though all entities are peer-levelled by the natural decentralisation of a cryptocurrency, its p2p network layer and its codebase/open source dev model, game theory suggests that all entities within a given cryptocurrency ecosystem will still seek to optimise their individual (selfish) position within the p2p state. A cryptocurrency is thus a dynamic battle between this game theoretic selfishness and the inherent p2p levelling effect. In the Darwinian ‘selfish gene’ context, this is the battle between the selfishness of genes versus the altruistic reality of the higher organism/state. An individual person might want as much wealth and as many children as they deem necessary, but the society and resource domains within which that person exists may be harmed by overly-selfish persons and their over-actions. A p2p model should naturally identify an overly weighty node as aberrant and deleterious to p2p dispersion; should the codebase itself act to preclude fat nodes from forming? The 34% and 51% thresholds define the risk that a blockchain can be attacked/pwned by a (Byzantine) majority, and the codebases take many steps to limit, preclude or cope with 34%/51% attacks. Should a cryptosociety do the same? “Crypto creates a new layer of abstraction that allows for not just the abstraction of code, but programmable value and the abstraction of value.” ref: https://www.ribbonfarm.com/

    Crypto seems set not only to cause the abstraction of value (anything humans value can have a token to track it), but perhaps in a recursive loop crypto might cause the abstraction of all human social interactions. There seem to be few aspects of human social interaction which don’t use, require or exploit cryptoeconomic foundations such as game theory and behavioural economics. Humans constantly run accounts/ledgers in their heads which keep running tallies of their social capital: how much do I still love my spouse, who do I want to spend my time with, can I be bothered to spend the time to attend my gossip group’s brunch. Humans mentally calculate their social interactions, there is a mental ledger that gets tabulated as part of the decisional loop. If Beyoncé launches a token that her fanbase can trade so as to express their economic preferences around their admiration of her, then perhaps all human social interactions will become ensnared and mediated by a tracking token. If money is a socially constructed reality, then social constructed interactions might all be vulnerable to being enumerated by tracking tokens. Token ecologies might then perform a reverse takeover: rather than reflecting our social choices they may end up dictating them to us in the first instance. You have no spare CloseFriendTokens in your purse just now? Then you can’t afford me as a friend this afternoon. It will be interesting to observe all human social structures and behaviours get remodelled, renovated, enumerated, taxonomised or replaced as such social tokenisation economics sweep in and cause a profound redefinition of the heuristics and mores that previously underpinned and defined all such social actions and patterns. Humans spend the majority of their lives pursuing acts that result in social outcomes that benefit them or that are expressions of their innate preferences, is this robust/antifragile to being turned inside out via the tokenisation of previously unstated social rules?
    Pricing all aspects of human affairs will of course lead to the nightmare horror end state where we know the price of everything, but the value of nothing. In an ecology where everything is cryptotokenised and cryptoeconomics infects all social actions, the role of cryptoeconomist/market maker becomes primarily important. Society will need heuristics, markets and brokers who reliably and adaptively support entities who trade social tokens so as to conduct social transactional business and determine price/do resource allocation/do preference discovery. Society might one day be composed, driven by and signalled by its social token marketspace and its horse whisperers. Reverse parasitism: blockchain and cryptotech is not a parasite that feeds of human affairs: rather, human affairs will likely rearchitect themselves and bend across to become parasites of the various bounties that blockchain tech naturally offers: meritocracy, decentralised organisation, cryptotokenisation as revealer, staking as skin in the game, onchain governance loops that mutate as need arises, et al. The inner archetypes that emerge from blockchain tech are too useful and will backwards infect us due to their usefulness. Humans will mould and change their current political and social workings to mimic the way such matters are solved and enacted in the blockchain dev/mainnet cycle. To decide what laws rule your tribe, sometimes you UASF, sometimes you hard fork like Ethereum Classic. Humans will co-opt this model and retrofit it to our existing social and political engine rooms. We won’t vote in presidential or party elections, instead we will carbon vote and commit the rollout through a UASF, see your twitter feed for instructions on how to activate this latest social fork regarding new gay marriage laws or gun laws. Disagree with your boss, spouse, city, military? Exit and leave to join a different forked version, else fork it yourself and create your own crypto-mediated tribe. Cryptoeconomic principles start informing humans on how to mediate, share, disperse and optimise their social behaviours. The current human notion of what factoids go together to constitute a truth will be displaced by the blockchain notion of what a truth statement is. Unless a factoid is encoded and buried down in the past block depths of a canonical chain (finality), then humans won’t accept it as truth/immutably sure. Blockchain works so well to record immutable factoids that it will become the gold (and only trustable) standard of what is a past, established, recorded truth. Humans record keeping systems are fallible; blockchain records are nigh impossible to post-dict. I trust a past confirmed block and its coded bytes more than I trust the government’s tax database. Crypto consensus science becomes human legal process; blockchain archive explorers replace newswebsites/Wikipedia; longest chain repo’s replace your municipal library. Cryptoeconomics seems destined to generate and formalise a new taxonomy of incentives and disincentives — for example: whereas a dog will chase a frisbee if you reward him with a doggie biscuit for doing so, a noobie will buy an ICO if she thinks it will 10x in two weeks flat. A studied listing of observed actions that betray our ‘incentives and disincentives inner daemon’ (in other words, the science of economics) will get codified and exposed as a taxonomy as dev teams strive/keep on writing and refining their ongoing releases of cryptocurrency issuances, chasing functional purity to best capture, reflect and enable the monetary needs of the userbase. Cryptocoin codebases will increasingly discover, encode and then manage the lifecycle of this taxonomy. Over time, increasingly, crypto codebases will capture, ingest then encode which axioms are revealed by use to best reflect how the userbase does or does not respond to a particular incentive or disincentive inherent in economic use of a cryptocoin. The cryptotaxonomy will become our ontology, the landmass and edge boundary of what we can know and consider as being the revealed ‘truth rules’ that best axiomatise our behaviour around the incentives and disincentives we express/encounter as we act. Cryptocurrency is a petri dish where we input our behavioural economics ideations and heuristics, and then see what colonies grow in the agar culture there. There is not a logical association between what economic thoughts we impose into the culture dish, and what actually grows as a response — Dogecoin shouldn’t survive/flourish, according to (otherwise-reliable) orthodox economic science prelates. Crypto is the way we test drive unorthodox, heretical ideas about what we think we know about homo economicus . Expect a circus, not a scripted tv show. Cryptoeconomics ingests classical notions derived from the corpus of economic thought and recasts such axioms as statements that can be executed in a sharded state model : cryptoeconomics is eating the classical economics canon and spitting it out as a cryptoconsensus codebase. Disclaimers: just my ideas about possible scenarios for near-term future. This is not investment advice. I’m ego-driven, clueless and biased, so do your own thinking. I’m not qualified, I have no special privileged position to drive my insight, I’m a nobody, is what you should assume about me and what I say here. My ZenCash address = znk9GjfbzRHwDiMWmq2xeTi5FNkgnzQXthg

AUTHOR
blacque64