When we hear about cryptocurrencies like Bitcoin, it's usually through sensationalist articles that declare it to be the economic savior of mankind or warn about the apocalyptic risks of shifting away from fiat currency.
The truth is that most people do not fully understand the cryptocurrencies-and, yes, this includes the creators themselves. It's not that cryptocurrencies are really that complicated, and it's just that the market is a complex organism with countless unknown variables.
We are early in the life cycle of these currencies, and there no way to know who will actually succeed in the long run. What does success even mean, though? What will a "successful" cryptocurrency look like, three or five years in the future?
Culture of cooperation
From the works of the late Nobel Prize winner, John Nash, we are defining the world. 've come to realize that cooperation is the key for all of us to "win" in the world of cryptocurrency.
"The Best for the Group comes into the world" (19459003)
The first step is to identify the players in this game.
There's a lot that we can learn from the nature of this world. Take fire ants for example: if one of them were to fall in a river, it would probably drown. However, when a group of them end up in water, they cooperate to form a living raft, preventing the group from drowning.
This is a good example of how to lead the group towards better outcomes. But how do you teach this behavior?
Wildebeests: individualism hurts
With the help of a person who was able to work in the field of self-interest? wildebeests, you can have a herd of a few thousand, which provides some superficial protection from predators. You would think that a single lioness would not stand a chance against such a huge army of wildebeests, but the truth is that it can be easily compared to others. They are scattered, they are scattered in many directions, and the lioness is free to rip one of them to shreds.
The "everyone for themselves" attitude is so ingrained in wildebeest other is just not part of their behavior. In game theory, these kinds of players are called "dummy players." They provide no real value to the ecosystem. They do not improve outcomes; they're just kind of … there.
What does a cryptocurrency network include of? What makes up the ecosystem, not just the currency itself? The ecosystem is primarily made up of users who use the currency and the merchants that accept the currency. It is also made up of the financial services and physical infrastructure that make the currency easy to use.
If the dominant culture in the ecosystem is based upon the greed and competitiveness, the quality of the network will reflect this . Merchants will generally opt to charge higher fees for their long-term incentives. The financial services like ATMs will come together with high fees as well. The end result is the best value for the money (for the day to day) and the return, the superficial in nature. The incentives within this network have been made possible rather than having a stable ecosystem.
Trust is currency
In a cooperative network, the focus is placed on a stable ecosystem. Since the core of the ecosystem is the currency, a stable currency acts as a trusted medium of exchange. With a stable growth currency, the fear of a fluctuating price is removed
Without fluctuating prices, the financial services like. Merchants and users are more likely to accept such and such a currency.
When you foster a culture of trust and cooperation, the players tend to lean towards each other. They see the bigger picture and contribute to the greater good of the network. Merchants see you for the short-term winnings. They
This makes a cooperative network inherently more valuable. Not to be avoided in a social co-operation, "fire ant" approach result in more social harmony, but it shows itself in
Network effect: quality over quantity
Bitcoin advocates like to throw The term "network effect" when speaking of the resilience of the Bitcoin network, and while it is true that a larger network of people using a currency can be a huge asset, it is not the only factor at work.
The quality of the network is important. The quality of a network is directly linked to its innate value and its ability to grow in a more harmonious direction. A cryptocurrency token is essentially like a share in the overall ecosystem. (19459003)
As the ecosystem grows stronger, the true value of the currency will naturally rise. Conversely, if you have a weak, disconnected, fragmented network of speculators, a high price in the cryptocurrency would indicate a lack of true value and the presence of a highly inflated value.
Therefore, the real value of the Currency is ultimately in the culture of people who make up the network. A network of ants and a network of wildebeests are entirely different ecosystems. They have different values, so they create different results.
The sad reality is that this type of supportive culture can not be taught after the currency is already overrun by speculators. You have to instill this culture as you grow it. Is our behavior closer to wildebeest or ants? Do people lean towards acting in self-interest, rather than for the collective benefit of the group?
If a system incentivizes the problem, then the ecosystem will be weaker or less reflective. this. So we need to be aware of this when designing incentives. The ecosystem of a cryptocurrency needs to have a positive impact on the future. In other words, what the individual wants and the good of the group need to be the same thing. A 1945,
The price incentive
The price incentive
A price can not be much of an incentive for the incentive regular user, but price appreciation is a strong incentive to attract skilled people as such as grassroots activists, reserve investors, marketers, strategists, and more. These valuable players are the brains of the currency and can help the currency grow. However, if the price of the currency is not enough and has already risen a bit, what exactly is the incentive for these skilled people to help the currency grow?
Have gotten to the bottom of a currency that has the makings for a meteoric rise. Serious people with a "fire ant" mentality (19459003)
Take Bitcoin for instance of dollars or more for the privilege of competing with speculators, in an ecosystem shaped out of greed and reliance on a currency that is more than likely overvalued. What a deal, right?
Real users are the value
The ultimate value comes from a large user base of real users and what they bring to the currency's ecosystem. The currency has to grow with these people,
If you have a stellar community with strong cooperative ethics and stability, you are giving a strong value proposition. In turn, they will return by favoring your currency with their use and their loyalty. They may not be all the fire, but they will be real users that help you build your trust in the currency (19459003)
When you set the stage for success, you will invite more supporters than adversaries. If the goal is to be able to pay the price of an asset, it will be possible to realize it. The bubble will eventually burst.
The innate value of a currency relies on stability and the trust that comes from that. It is the only way the ecosystem can grow in a healthy way. However, this can not be done since the very beginning, because you can not convince a large group of speculators to act cooperatively no matter how loud your voice is.
There is value in the type of users that you need to attract. Humans have the capacity to act cooperatively, but they need enough incentives to guide them. They need a culture that supports correct action. You Can not Ask For Altruists and Then Disincentivize Altruism.
As your cooperative network grows larger and stronger, it will help you to achieve the goal of keeping the currency robust. All of this ends up paying off massively as the system achieves stability. At a global level, the ecosystem could grow even more widely to help build a cooperative world.
What makes up the cryptocurrency ecosystem