The author, Dr. Nicholas Adams Judge, is a cofounder of RootProject. The other cofounder is Chris Place, a Y Combinator Fellow. Their nonprofit’s pre-ICO passed 512% of its goal. The ICO ends November 17th, 2017. The cofounders are taking zero tokens and no compensation beyond a reasonable salary.

I’m a political economist. I wrote my doctoral dissertation on models of currency markets. The power of cryptocurrencies is greater than even those in the cryptocurrency community have understood.

RootProject’s Token, ROOTS

I’m a ‘political economist’ instead of plain ‘economist’ because I focus on institutions as well as markets. Institutions determine who wins wars, what countries get to be free, and the pace of economic growth. The best way to think about cryptocurrencies? Ask what new institutional capacities they create.



To do that, put away your theory, put away your ideology. No one cares. Instead, think about feedback loops. Raise .99 to a large number, you get zero. Raise 1.01 to a large number, you approach infinity. If each day an institution’s efforts multiply its last day’s effects by 99%, it fails. If that number becomes 101%, it scales, it becomes a Google or Apple — until something pushes that number back below 1.



The genius of cryptocurrencies is that a liquid asset can be designed along with a new institution to create a currency value — institutional size feedback loop.

Call it the Feedback Loop theory of cryptocurrencies. Its most exciting consequence: Value can be created for investors from non profit-seeking behavior. The cryptocurrency brings the power of markets and investor self-interest to the table; the nonprofit brings the moral relevance.

That does create dangers for nonprofits — but that’s like saying bitcoin can be used by smugglers, so let’s give it up. It misses the bigger story.



Let’s illustrate the major story here by what we’re doing at RootProject, whose pre-ICO is currently under way. Each part is simple. How they come together is illustrated in the figure above.