Tokenomics (token economics or crypto-economics) study the economic institutions and policies of the distribution, production, and distribution of goods and services that have been tokenized. Blockchain technology has become the driving force of innovation on the internet.
Such developments have mobilized economic transactions that rely on tokens and do not require centralized intermediaries like banks or big enterprises. The nature of these commercial systems differs from the traditional industrial economies as their characteristics are decentralized, requiring very little capital to scale, and offering significant security of transactions.
What is a Token?
Tokens, in a general sense, are units of value issued by an organization, but in the context of Tokenomics, it is more specifically built on top of an existing blockchain. Tokens have been rebranded with the advent of blockchain, but tokens have always been around. Concert tickets, gym membership cards, and driver’s licenses are all examples of tokens representing value with a more specific use case than currency.
This value may be in the form of access to a service, rights over an asset, ownership of an organization, etc. Tokens can thus fulfill different roles in any given native ecosystem by codifying all kinds of values.
What makes Tokenomics Different?
Having briefly understood what Tokenomics is, let’s explore why it is fundamentally different from the economics we generally operate in. In the modern economy, economic forces that govern our lives have, over time, become increasingly channeled in a few centralized bureaucratic institutions.
With access to the internet and distributed ledgers, resources of various kinds (including financial capital, supply chain information, etc.) are now flowing through these information networks. Developments in blockchain provide secure and reliable ways to model token economies to reflect better markets’ underlying logic in the face of new technologies.
Some application of token economics
· Full cost accounting
· Better alignment of producer and consumers
· Triple entry accounting
· Incentive system
Tokenomics remains
a field in its infancy. Considering that it changes a lot of the foundational
cornerstones of the current world economy, there is a lot to be explored. With
the wider adoption of tokens, they are developing more complex and specific use
cases every day.
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