Cryptocurrencies economics

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Cryptocurrency economics is one of the most interesting field in which we have to study economics cryptography and computer science in a combination and its major focus is on study of economics systems and its incentives that are under cryptocurrencies and under blockchain and network. I want to elaborate today significance of cryptocurrency economics in the world and many more...

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How there are some particular economic incentives are helpful in creation and maintenance of decentralized network it all can be studied under the category of cryptoeconomics so if I talk about traditional economics systems then they have total reliance on some specific or centralized authorities that are responsible for maintaining rules and regulations and different insentivizes but when I talk about decentralized network as we have different blockchains there is no Central person or particular person who takes over the control of hole system because there are predefined rules and regulations in decentralized network according to which blockchain network operates and these rules and regulations are enforced through consensus mechanism and cryptography.

Consensus mechanism is one of the major mechanism and concept which act as fundamental of a blockchain and very useful to know in Crypto economics so these are basically some of the protocols that allows its participants to agree at a particular state of ledger without depending upon any other person so everyone is free to share their ideas here and consensus mechanism is always for giving surety on validity of transactions that these transactions would be validated in a secure and transparent way as well as validity of the orders in which they are added into the blockchain.

When I talk about different consensus mechanism then they have their own pros and cons or another words we can say that strengths and weaknesses as well as there are particular consensus mechanism if I given example then these could be proof of work proof of state and delegated proof of state as delegated proof of stake STEEM is working. Bitcoin is working on the consensus mechanism which is proof of work in which participants participate and solve complex mathematical equations and then they proceed and validate transactions and in this way they create blocks as well as there is another consensus mechanism in which users or participants have to stake their currency for validation of transactions and for creation of new blocks.

Participants can play their role in a blockchain network in their best way when consensus mechanism provide them some of the economic incentives so if I given example then you can say that there is a blog change in which there is proof of work consensus mechanism following so users or participants would receive reward after they would solve mathematics equations or puzzles and they would create new block so in this way they would be rewarded by newly minted cryptocurrency. While in proof of stake participants would get reward in the form of less transactions fees and additional currency depending upon amounts of their staked tokens.

There is another concept which is most significant to understand in cryptoeconomics and this is the concept of token economics. When I talk about tokens then these are basically digital assets that shows their ownership in a block chain and when I talk about token economics then they are main focus in designing and managing all these tokens for creation of value and for alignment of interest of a participants so there are different considerations you have to keep in mind when you are dealing with token economics and these considerations could be token distribution uses of token and governance of token etc.

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When I talk about economic incentives then they are very important and significant in giving security and over all stability to blockchain network because these are important and significant for aligning interest of different participants and for giving them encouragement so that they may act with full of their honesty and they would try to follow all rules and regulations so when they would receive rewards and penalties according to their desirable behaviour or malicious behaviour then in this way economics would help to create a trustless and robust system in which every participant would feel free to interact with the ecosystem and would feel very confident.

Now I am very confident at last that you are understanding it very well now about cryptocurrencies economics because I tried my best to explain some of the significant thing which were associated with it. I am trying my best to improve my knowledge for all of you so hopefully now all of you would like my post.

Have a blessed day