Summary of Token Economics book by Complexity Labs

Complexity labs published the book in early 2017 and today it is even more relevant concerning the state of crypto ecosystem. Their team envisioned that topic getting hot today, cryptonetworks, is the logical continuation of decentralized networks development and internet economy.

Introduction

Token economics (crypto economics) — is the study and design of economic systems based on distributed ledger technology.

Economic forces shape and structure how we organize people, resources and technology in the process of creating and exchanging value. Those forces are now structured as centralized bureaucratic institutions: enterprises and nation-states. However, we are now on the move out of industrial production into global services and information economy, coordinated through the internet running on a set of updated protocols that provide secure distributed infrastructure.

The transition is based on three major trends of the late 20th — 21st century:

Privatization opening new spheres of economic activities to markets;

Globalization expanding those markets around the world;

Financialization connecting real economy into an integrated information-based system;

Platform economy creating a new form of user-generated networks.

Cryptonetworks powered by blockchain connect these previously separate trends as they are able to support economic model that comes in harmony with its underlying technology of information. With trillions of dollars of bonds, equities, venture capital and currencies set to start flowing along newly built channels, the stakes are high.

Disruption without redesign is dangerous.

Token economics is an opportunity to revisit foundations of economic organization and reconstruct a new form of economy different from industrial model. It is no longer about politics or idealism but rather economic incentives in distributed networks where each actor sees it as economic interest to make its move. We can now design economic systems from the ground up and their success will rest not with certain actors but the design of the system.

It is not as difficult to make that move as it may be seen at first glance. Specific parts of existing economic institutions can be upgraded in an asynchronous fashion, stay backward compatible and interoperable with legacy structures.

Cryptonetworks go beyond pure economic utility and GDP incorporating all relevant parameters and value sources. They are able to make the economy more open, inclusive, secure property rights, reduce transaction costs integrating people into the global economy in an effective way.