Class 5

Project Demos, Mechanism Design and CryptoEconomics

In order to have a decentralised database, you need to have security. In order to have security, you need to - you need to have incentives.

- Vitalik Buterin

Cryptoeconomics is not a subfield of economics, but rather an area of applied cryptography that considers account economic incentives and economic theory. Bitcoin, Ethereum and all other public blockchains are products of cryptoeconomics.

Cryptoeconomics is about building things using mechanism design.

Cryptoeconomics is what makes blockchains interesting; it makes them different from other technologies.

In this class, we’ll demo our cryptocurrency implementations. In the 2nd half of class, we'll explore game theory.

How can we use incentives (and penalties) to predict the actions of the parties in our cryptocurrency economy.

What are the right incentives?
How much do we penalize bad actors?

We'll consider how to adjust incentives and penalties to achieve crypto economic equilibrium.

The assignment will include a non-zero-sum game simulation, where it's at least possible that both players can be better off -- a win-win.

When your registration has been confirmed, you will receive a zip file containing the course outline (AGENDA) with reference links and PDFs organized by class.

Copyright: Cryptocurrencies Developers Class. Do not copy without permission.