Cryptoeconomics: Igniting a New Era of Blockchain
- Length: 182 pages
- Edition: 1
- Language: English
- Publisher: Auerbach Publications
- Publication Date: 2020-05-14
- ISBN-10: 0367429934
- ISBN-13: 9780367429935
- Sales Rank: #1280379 (See Top 100 Books)
“A systematic review of the structure and context of the blockchain-derived economic model… (the book) describes cryptoeconomics in connection with the game theory, behavioral economics and others in simple understandable language.”―Wang Feng, founder of Linekong Interactive Group and Mars Finance, partner in Geekbang Venture Capital
Blockchain technology has subverted existing perceptions and is the start of an economic revolution, called, cryptoeconomics. Blockchain is a key component of cryptoeconomics. Vlad Zamfir, a developer of Ethereum, defines this term as “a formal discipline that studies protocols that governs the production, distribution, and consumption of goods and services in a decentralized digital economy. Cryptoeconomics is a practical science that focuses on the design and characterization of these protocols”.
This book explains the structures of blockchain-derived economic models, their history, and their application. It uses real-world cases to illustrate the relationship between cryptoeconomics and blockchain.
Blockchain technology solves trust issues. A blockchain application can restrict behavior on the blockchain through a reward and punishment system that enables consensus in an innovative way. The greatest significance of cryptoeconomics lies in guaranteeing safety, stability, activity, and order in a decentralized consensus system. Security and stability are achieved mainly by cryptographical mechanisms. Activity and order are achieved through economic mechanisms.
Cryptoeconomics and Blockchain: Ignighting a New Era of Blockchain discusses the most popular consensus algorithms and optimization mechanisms. With examples explained in clear and simple terms that are easy to understand, the book also explores economic mechanisms of blockchain such as game theory and behavioral economics.
Cover Half Title Title Page Copyright Page Table of Contents Foreword Preface Authors 1 What Is Cryptoeconomics? 1.1 The Basics of Cryptography 1.1.1 Hash Algorithm 1.1.2 Key Encryption 1.1.3 Digital Signature 1.2 Basic of Economics 1.2.1 Incentives 1.2.2 Punishment 1.3 Supply and Demand 2 Mechanisms of Consensus 2.1 The Byzantine Generals Problem 2.2 CAP Theory 2.3 PoW (Proof-of-Work) Mechanism 2.3.1 Problem of PoW 1: Waste of Resources 2.3.2 Problem of PoW 2: Environmental Problem 2.3.3 Problem of PoW 3: Centralization of Computing Power 2.4 PoS (Proof-of-Stake) Mechanism 2.5 LPoS (Leased Proof-of-Stake) Mechanism 2.6 DPoS (Delegated Proof-of-Stake) Mechanism 3 Optimized Consensus Mechanism 3.1 Optimized Versions of PoW Mechanism 3.1.1 Litecoin’s SCRYPT Algorithm 3.1.2 Tandem and Dash 3.1.3 Parallel Algorithm and Heavycoin 3.1.4 Primecoin 3.1.5 Ethash and Ethereum 3.1.6 Equihash and Zcash 3.2 Optimized PoS 3.2.1 Byzantine General and Byzantine Fault-Tolerance Algorithm 3.2.2 Algorithm for Realizing Proof-of-Stake (1) Tendermint and POS Based on BTF (2) CFFG (3) CTFG 3.2.3 Trap of Proof-of-Stake (1) Relations with No Interest (2) Remote Attack (3) Cartel Formation (4) Future Work 3.3 PBFT Optimized Version: Federal Byzantine Agreement (FBA) 3.4 Other: Algorand Agreement 4 Game Theory and Cryptoeconomics 4.1 What Is Game Theory? 4.2 Nash Equilibrium 4.3 Schelling Point 4.4 Bounded Rationality Model 4.5 Game Theory Mechanism Design and Consensus Mechanism 4.6 Game Theory Mechanism Design and Blockchain Security 4.7 Prospect of Game Theory-Based Consensus Mechanism – Ethereum’s Casper Consensus Algorithm 5 Behavioral Economics and Cryptoeconomics 5.1 Behavioral Economics vs. Traditional Economics: Irrational vs. Rational 5.2 Behavioral Economics in the Blockchain World 5.2.1 How to Introduce Blockchain to Friends? 5.2.2 Why Are You Completely Indifferent to $10,000 Bitcoin, While Some People Are Crazy for it? 5.2.3 Why Do So Many Projects Like Airdrops? 5.2.4 DAO Is Really the Main Form of Organization in the Future? 5.2.5 How to Control Our Impulses? Maybe You Need a Smart Contract 5.2.6 Dilemma of Multiple Choices: Why Do We Want to Participate in All Projects? 5.3 The Intersection of Behavioral Economics and Cryptoeconomics 6 Cryptoeconomics and the Security of Blockchain 6.1 Sybil Attack 6.1.1 Cost of Sybil Attacks on Traditional and Blockchain Networks 6.2 Fork: Soft Fork and Hard Fork 6.2.1 Fork, Soft Fork, and Hard Fork Concepts 6.2.2 Main Characteristics of Soft Fork and Hard Fork 6.2.3 The Importance of Forks 6.3 P + ε Attack 6.3.1 What Is P + ε Attack 6.3.2 Protection from P + ε Attacks 6.4 DAO Attack 6.4.1 The Significance of The DAO Cryptoeconomics 6.5 Zero-Knowledge Proof Summary 7 Blockchain in China 7.1 The Power of Blockchain in Real Life 7.2 Real Use Cases of Blockchain in China 7.2.1 Financial Solutions 7.2.2 Police and Other Governmental Solutions 7.2.3 Food Safety and Supply Chain 7.3 Secret of Chinese Success 8 The Future of Cryptoeconomics Conclusion Index
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