ASSIGNMENT ON

CRYPTO ECONOMICS

Submitted By:
Anagha G (1927028)
Amrutha G (1927035)
Megha B. (1927037)
Haimanti Banik (1927137)
 CRYPTO ECONOMY

What Is Crypto Economy?

The crypto economy comes from two words: cryptography and economics.

Economy is creating new types of systems, applications and networks using incentives and
cryptography. The cryptoeconomy, in particular, is concerned with creating things and has
more in common with the design of mathematical and economic mechanisms.

Cryptoeconomics brings together the fields of economics and computer science to study the
decentralized marketplaces and applications that can be built by combining cryptography
with economic incentives.

The crypto economy is not an economy sub-area; it is a field of applied cryptography that
takes economic incentives and economic theory into consideration. Bitcoin, Ethereum,
Zcash, and all block chains are creations of the crypto economy.

The cryptoeconomy originated from the Bitcoin digital currency, which is embedded in the
history of internet and video games. It now includes several distributed implementations that
exploit the underlying technology, known as block chain. Block chain allows digital objects
to be truthful and scarce, which implies a connection that was previously unavailable to
technologists between the digital and physical world. Using this Lego block, entrepreneurs,
incumbents, and technology companies imagine a world on a new type of decentralized
infrastructure with implications for payments, savings, investments, insurance, and identity.

How is Crypto-technology being used?

Blockchain companies discussed new tokens and the capabilities of new Blockchain
companies during this year's IoT Technology World Congress in October. Such businesses
are looking for other ways to use this open, all-inclusive and accessible software to extend
into hacking, recruitment, community building, and more.
Blockchain may ultimately help us to get one-step closer to becoming one with the digital
world, and cryptocurrency may be the first live test.

Companies such as Circle and Abra are taking advantage of the lower costs offered by
blockchain technology for cross-border payments, encroaching in the territory of players like
Venmo (now part of PayPal), TransferWise, and traditional remittances providers. Visa and
MasterCard are both exploring uses for similar technology to improve the way they process
payments, while Ripple is lowering the cost of transactions between banks and other financial
institutions through its global settlement network.

Perspective:

In the crypto world, programmed protocols enforce rules within decentralized p2p networks
and therefore ensure value and security. In comparison to our larger nation states, the nice
thing about decentralized p2p networks is that:

 Nobody can force you to participate.

 There is no central authority (like a government) who can misuse their monopoly of
power (think about the horrid things corrupt and unethical governments have done,
like genocide, slavery, discrimination.)
 There is no physical violence used to make participants stick to the rules.
 You trust in open-source code to provide you with security.

We often imagine Bitcoin and other cryptocurrencies like no rules, no social norms, only
greed, selfishness and mining. This perceived lack of law and order makes the crypto world
scary to many people. However, in reality, there are rules that govern decentralized peer-to-
peer (p2p) networks such as Bitcoin. These rules are coded into protocols and deliver the
framework for how participants of a network interact with each other. They help us create a
secure, trustworthy and valuable system, just like laws deliver a framework for a better
society. Cryptoeconomics asks the question of how we can design these rules and incentives,
so that the networks stay secure and create value for everyone. Cryptoeconomics uses
cryptographic tools, game theory and economic incentives to achieve this goal.