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Cryptoeconomics

From Wikipedia, the free encyclopedia

Cryptoeconomics is an evolving economic paradigm for a cross-disciplinary approach to the study of digital economies and decentralized finance (DeFi) applications.[1][2] Cryptoeconomics integrates concepts and principles from traditional economics, cryptography, computer science, and game theory disciplines.[3] Just as traditional economics provides a theoretical foundation for traditional financial (a.k.a., Centralized Finance or CeFi) services, cryptoeconomics provides a theoretical foundation for DeFi services bought and sold via fiat cryptocurrencies, and executed by smart contracts.

Definitions and goals

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The term cryptoeconomics was coined by Ethereum users around 2014-2015,[4] The earliest public documented usage is a 2015 talk by Vlad Zamfir entitled "What is Cryptoeconomics?"[5][original research?]

History

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See also: cryptocurrency § History

The historical roots of cryptoeconomics can be traced to the rise of altcoins, prominent among them the Ethereum project, which in 2015 pioneered the integration of smart contracts into its blockchain, thereby enabling a wide range of DeFi applications.[6]

Subdisciplines

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Crypto-macroeconomics

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Crypto-macroeconomics is concerned with the regional, national, and international regulation of cryptocurrencies and DeFi transactions. More broadly, this subdiscipline analyzes the transmission of shocks and volatility between the emergent cryptocurrency markets and the traditional economy.[7] Research in this area investigates the growing integration of crypto assets with conventional assets, finding significant spillover effects where shocks in one market transmit to the other.[8] Recent studies using structural models show that cryptocurrency price shocks—driven by factors like market sentiment and technology—are quantitatively important drivers of fluctuations in traditional markets, such as equities and commodities. Furthermore, these shocks have a notable impact on key macroeconomic variables, explaining a significant portion of long-term price-level variance and thus carrying direct implications for monetary policy and inflation forecasting.[9]

This growing economic significance has, in turn, prompted varied policy responses from governments around the world. The Group of Seven governments' interest in cryptocurrencies became evident in August 2014, when the United Kingdom Treasury commissioned a study of cryptocurrencies and their potential role in the UK economy, and issued its final report in January 2021.[10] In June 2021, El Salvador became the first country to accept Bitcoin as legal tender.[11] In August 2021, Cuba followed with a legal resolution to recognize and regulate cryptocurrencies such as Bitcoin.[12] However, in September 2021, the government of China, the single largest market for cryptocurrency, declared all cryptocurrency transactions illegal, completing a crackdown on cryptocurrency that had previously banned the operation of intermediaries and miners within China.[13]

Crypto-microeconomics

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Crypto-microeconomics is concerned with the individual and enterprise usages of cryptocurrencies and DeFi transactions. A 2021 survey found that a strong majority of USA adults have heard about major cryptocurrencies (Bitcoin, Ether), and 16% said they personally had invested in, traded, or otherwise used one.[14]

Criticisms and controversies

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See also: cryptocurrency bubble

Bitcoin, along with other cryptocurrencies, has been described as an economic bubble by many economists, including Robert Shiller,[15] Joseph Stiglitz,[16] Vasilis Kostakis,[17] Richard Thaler,[18] Paul Krugman,[19] and Nouriel Roubini.[20] In addition, Bitcoin and other cryptocurrencies have been criticized for the amount of electricity required for cryptocurrency “mining” (blockchain transaction validation),[21] and for their being used to purchase illegal goods.[22][23]

See also

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References

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  1. ^ "MIT Cryptoeconomics Lab". MIT Sloan. Archived from the original on 2022-06-22. Retrieved 2022-08-07.
  2. ^ "Cryptoeconomics - Wikiversity". en.wikiversity.org. Retrieved 2022-08-07.
  3. ^ Berg, Chris; Davidson, Sinclair; Potts, Jason (2019). Understanding the Blockchain Economy: An Introduction to Institutional Cryptoeconomics. Edward Elgar Publishing. ISBN 978-1-78897-500-1.
  4. ^ Brekke, Jaya; Alsindi, Wassim (2021). "Cryptoeconomics". Internet Policy Review. 10 (2). doi:10.14763/2021.2.1553. hdl:10419/235957. S2CID 242297787.
  5. ^ Zamfir, Vlad (February 2015), What Is Cryptoeconomics?, retrieved 2022-08-06
  6. ^ Klintfin, Eric (2015-08-01). "Vapor No More: Ethereum Has Launched". TechCrunch. Retrieved 2025-09-15.
  7. ^ Katsiampa, Paraskevi; Corbet, Shaen; Lucey, Brian (2019). "Volatility spillover effects in leading cryptocurrencies: A BEKK-MGARCH analysis". Finance Research Letters. 29: 68–74. doi:10.1016/j.frl.2018.07.010.
  8. ^ Charfeddine, Lanouar; Benlagha, Noureddine; Maouchi, Yousra (2020). "Investigating the dynamic relationship between cryptocurrencies and conventional assets: Implications for financial investors". Economic Modelling. 85: 198–217. doi:10.1016/j.econmod.2019.05.017.
  9. ^ Chen, Zhengyang (2025). "From Disruption to Integration: Cryptocurrency Prices, Financial Fluctuations, and Macroeconomy". Journal of Risk and Financial Management. 18 (7): 360. doi:10.3390/jrfm18070360.
  10. ^ "UK regulatory approach to cryptoassets and stablecoins: Consultation and call for evidence" (PDF). HM Treasury. Retrieved 1 October 2021.
  11. ^ "Bitcoin legal tender in El Salvador, first country ever". Mercopress. 10 June 2021.
  12. ^ "Cuba's central bank now recognizes cryptocurrencies such as bitcoin". CNBC. 27 August 2021.
  13. ^ "China declares all crypto-currency transactions illegal". BBC News. 24 September 2021. Retrieved 24 September 2021.
  14. ^ Andrew Perrin (11 November 2021). "16% of Americans say they have ever invested in, traded or used cryptocurrency". Pew Research Center. Retrieved 2022-08-06.
  15. ^ Shiller, Robert (1 March 2014). "In Search of a Stable Electronic Currency". The New York Times. Archived from the original on 24 October 2014.
  16. ^ Costelloe, Kevin (29 November 2017). "Bitcoin 'Ought to Be Outlawed,' Nobel Prize Winner Stiglitz Says". Bloomberg. Archived from the original on 12 June 2018. Retrieved 5 June 2018. It doesn't serve any socially useful function.
  17. ^ Kostakis, Vasilis (1 March 2014). "The (A)Political Economy of Bitcoin". tripleC: Journal for a Global Sustainable Information Society.
  18. ^ "Economics Nobel prize winner, Richard Thaler: "The market that looks most like a bubble to me is Bitcoin and its brethren"". ECO Portuguese Economy. 22 January 2018. Archived from the original on 12 June 2018. Retrieved 7 June 2018.
  19. ^ Krugman, Paul (29 January 2018). "Bubble, Bubble, Fraud and Trouble". The New York Times. Archived from the original on 4 June 2018.
  20. ^ "Bitcoin biggest bubble in history, says economist who predicted 2008 crash". TheGuardian.com. 2 February 2018. Archived from the original on 12 June 2018.
  21. ^ Huang, Jon; O'Neill, Claire; Tabuchi, Hiroko (3 September 2021). "Bitcoin Uses More Electricity Than Many Countries. How Is That Possible?". The New York Times. ISSN 0362-4331. Retrieved 16 January 2022.
  22. ^ "Monetarists Anonymous". The Economist. The Economist Newspaper Limited. 29 September 2012. Archived from the original on 20 October 2013. Retrieved 21 October 2013.
  23. ^ Ball, James (22 March 2013). "Silk Road: the online drug marketplace that officials seem powerless to stop". theguardian.com. Guardian News and Media Limited. Archived from the original on 12 October 2013. Retrieved 20 October 2013.
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Further reading

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