Abstract
This chapter presents the Web 3.0 economy with a primary focus on the network economies of blockchain technology and distributed ledger technologies (DLTs). It is designed to present a general overview of the Web 3.0 distributed network economy in light of some business, finance, and economic theories and practices. The chapter thus lucid the analyses to aid understanding the applications of economic thinking and design to the newly evolving digital economic system. The chapter provides a conceptual review of blockchain tech economics by organizing dispersed thoughts in the field.
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Notes
- 1.
One of Canada’s largest cryptocurrency exchanges which was issued a Termination and Bankruptcy Assignment Order by the Supreme Court of Nova Scotia early April 2019, www.quadrigacxtrustee.com/
- 2.
See Swan, M. (2015). Blockchain: Blueprint for a new economy. O’Reilly Media, Inc.
- 3.
See World Economic Forum’s report “Building Block(chain)s for a Better Planet,” September 18, 2018, for a list of potential blockchain application for environmental protection (a total of 65 cases including valuation of natural capital, natural resource P2P trading or permits, supply chain, etc.), https://cointelegraph.com/news/world-economic-forum-outlines-over-65-blockchain-use-cases-for-environmental-protection/amp, accessed on April 2, 2020.
- 4.
Some of the companies covered in the IDC Market Glance include Ripple Labs Inc., Genpact Ltd., MaidSafe.net Ltd., Bitmark Inc., TIBCO Software Inc., IOTA Foundation, Chronicled, Inc., MultiPlan, Inc., Virtusa Corporation, Google Inc., Beijing Dajie Zhiyuan Information Technology Co., Ltd., The Boston Consulting Group Inc, OpenBazaar.org, Bank of England, US Securities and Exchange Commission, AlphaPoint Corp., BlockCypher, Inc., Microsoft Corporation, and so on; see IDC Market Glance: Blockchain 1Q19 at www.idc.com/getdoc.jsp?containerId=US44837919
- 5.
See IDC Market Glance: Blockchain 1Q19 at www.idc.com/getdoc.jsp?containerId=US44837919
- 6.
Gartner.com available at www.gartner.com/en/newsroom/press-releases/2019-10-08-gartner-2019-hype-cycle-shows-most-blockchain-technologies-are-still-five-to-10-years-away-from-transformational-impact, accessed on April 2, 2020.
- 7.
See Hyperledger frameworks at www.hyperledger.org/projects
- 8.
www.berkshares.org/berkshares_banks, accessed on April 2, 2020.
- 9.
Helicopter money is a term in monetary economics referring to central banks making direct payments to individuals, mainly in times of liquidity trap.
- 10.
In macroeconomic theory, Paul Romer (1990) developed a theory of economic growth with “endogenous” technological change. The theory explains how to construct an economy of profit-maximizing agents that endogenize technological progress. Economic growth, according to this theory, depends on population growth and capital accumulation. The robust prediction of the variant of this model is that an increase in population or an increase in the share of people working in the knowledge sector will increase economic growth.
- 11.
CNBC on June 4, 2018, ran a story, according to which “Google searches for ‘bitcoin’ nosedive 75% this year as interest in struggling cryptocurrency wanes.” Quoting the significant price increase of about $20,000 in December 2017 and the following fluctuations in the price of bitcoin, they reported that the prices dropped in 2018 by roughly 50%, www.cnbc.com/2018/06/04/google-searches-for-bitcoin-nosedive-75-percent-this-year.html
- 12.
Especially, in the collaborative economic settings of the zero marginal cost society; see Rifkin (2014).
- 13.
The asterisk (*) in the circulating supply column refers to “Not Mineable” cryptocurrencies. Data available at Coinmarketcap.com.
- 14.
Burniske, C. (2017). “Cryptoasset Valuation.” Medium, September 24, 2017.
- 15.
Spindt, P. A. (1985). Money is what money does: Monetary aggregation and the equation of exchange. Journal of Political Economy, 93(1), 175–204
- 16.
- 17.
Burniske (2017) rethinks the conventional asset pricing discounted cash flow (DCF) model mixed with equations of exchange for the cryptoasset valuations, “…using a discounted cash flow (DCF) analysis is not suitable. Instead, valuing cryptoassets requires setting up models structurally similar to what a DCF would look like, with a projection for each year, but instead of revenues, margins and profits, the equation of exchange is used to derive each year’s current utility value (CUV). Then, since markets price assets based on future expectations, one must discount a future utility value back to the present to derive a rational market price for any given year.”
- 18.
- 19.
- 20.
Jones, C. I. (1997). Population and ideas: A theory of endogenous growth (No. w6285). National Bureau of Economic Research
- 21.
Cong, L. W., Li, Y., and Wang, N. (2018). Tokenomics: Dynamic Adoption and Valuation
- 22.
CNBC on December 22, 2017, reported “Bitcoin-mania stock volatility shows the fallacy of ‘efficient markets’” following the Bitcoin bubble that their emotion beyond rational decision-making drives investors, www.cnbc.com/2017/12/22/bitcoin-mania-stock-volatility-shows-the-fallacy-of-efficient-markets.html, accessed on April 2, 2020.
- 23.
Data available at Coinmarketcap.com.
- 24.
- 25.
See a blog post by Vitalik Buterin, the co-founder of Ethereum, on the completion of the hard fork (July 20, 2016), https://blog.ethereum.org/2016/07/20/hard-fork-completed/, accessed on April 2, 2020.
- 26.
Bentov et al. (2016)
- 27.
- 28.
- 29.
- 30.
See Ernst and Young’s report (a trustee overseeing bankruptcy proceedings for the Quadriga cryptocurrency exchange) on the bankruptcy of Quadriga Fintech Solutions Corp., Whiteside Capital Corporation, and 0984750 B.C. LTD. of the city of Halifax in the Province of Nova Scotia, www.scribd.com/document/409470435/Trustee-Report-FINAL, accessed on April 2, 2020.
- 31.
On February 9, 2019, CBC reported the incident with a running head “Quadriga mystery deepens with little evidence of cold wallets containing $250M,” www.cbc.ca/news/canada/nova-scotia/quadriga-mystery-deepens-with-little-evidence-of-cold-wallets-containing-250m-1.5011573, accessed on April 2, 2020.
- 32.
On February 4, 2019, Bloomberg reported the news with a heading “Crypto CEO Dies Holding Only Passwords That Can Unlock Millions in Customer Coins,” www.bloomberg.com/news/articles/2019-02-04/crypto-exchange-founder-dies-leaves-behind-200-million-problem, accessed on April 2, 2020.
- 33.
See the interview with the Intangible Labs CEO, Nader Al-Naji, to Forbes on December 13, 2018, www.forbes.com/sites/michaeldelcastillo/2018/12/13/sec-rules-kill-cryptos-top-funded-startup/#5e1fc8b2918c, accessed on April 2, 2020.
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Turi, A.N. (2020). Web 3.0: The Distributed Information Network Economy. In: Technologies for Modern Digital Entrepreneurship. Apress, Berkeley, CA. https://doi.org/10.1007/978-1-4842-6005-0_3
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