book

Cryptoeconomics

by Jian Gong, Wei Xu

April 2020

Intermediate to advanced

182 pages

3h 5m

English

Auerbach Publications

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1.1 The Basics of Cryptography1.1.1 Hash Algorithm1.1.2 Key Encryption1.1.3 Digital Signature1.2 Basic of Economics1.2.1 Incentives1.2.2 Punishment1.3 Supply and Demand
2.1 The Byzantine Generals Problem2.2 CAP Theory2.3 PoW (Proof-of-Work) Mechanism2.3.1 Problem of PoW 1: Waste of Resources2.3.2 Problem of PoW 2: Environmental Problem2.3.3 Problem of PoW 3: Centralization of Computing Power2.4 PoS (Proof-of-Stake) Mechanism2.5 LPoS (Leased Proof-of-Stake) Mechanism2.6 DPoS (Delegated Proof-of-Stake) Mechanism

3.1 Optimized Versions of PoW Mechanism3.1.1 Litecoin’s SCRYPT Algorithm3.1.2 Tandem and Dash3.1.3 Parallel Algorithm and Heavycoin3.1.4 Primecoin3.1.5 Ethash and Ethereum3.1.6 Equihash and Zcash3.2 Optimized PoS3.2.1 Byzantine General and Byzantine Fault-Tolerance Algorithm3.2.2 Algorithm for Realizing Proof-of-Stake(1) Tendermint and POS Based on BTF(2) CFFG(3) CTFG3.2.3 Trap of Proof-of-Stake(1) Relations with No Interest(2) Remote Attack(3) Cartel Formation(4) Future Work3.3 PBFT Optimized Version: Federal Byzantine Agreement (FBA)3.4 Other: Algorand Agreement
4.1 What Is Game Theory?4.2 Nash Equilibrium4.3 Schelling Point4.4 Bounded Rationality Model4.5 Game Theory Mechanism Design and Consensus Mechanism4.6 Game Theory Mechanism Design and Blockchain Security4.7 Prospect of Game Theory-Based Consensus Mechanism – Ethereum’s Casper Consensus Algorithm
5.1 Behavioral Economics vs. Traditional Economics: Irrational vs. Rational5.2 Behavioral Economics in the Blockchain World5.2.1 How to Introduce Blockchain to Friends?5.2.2 Why Are You Completely Indifferent to $10,000 Bitcoin, While Some People Are Crazy for it?5.2.3 Why Do So Many Projects Like Airdrops?5.2.4 DAO Is Really the Main Form of Organization in the Future?5.2.5 How to Control Our Impulses? Maybe You Need a Smart Contract5.2.6 Dilemma of Multiple Choices: Why Do We Want to Participate in All Projects?5.3 The Intersection of Behavioral Economics and Cryptoeconomics
6.1 Sybil Attack6.1.1 Cost of Sybil Attacks on Traditional and Blockchain Networks6.2 Fork: Soft Fork and Hard Fork6.2.1 Fork, Soft Fork, and Hard Fork Concepts6.2.2 Main Characteristics of Soft Fork and Hard Fork6.2.3 The Importance of Forks6.3 P + ε Attack6.3.1 What Is P + ε Attack6.3.2 Protection from P + ε Attacks6.4 DAO Attack6.4.1 The Significance of The DAO Cryptoeconomics6.5 Zero-Knowledge ProofSummary
7.1 The Power of Blockchain in Real Life7.2 Real Use Cases of Blockchain in China7.2.1 Financial Solutions7.2.2 Police and Other Governmental Solutions7.2.3 Food Safety and Supply Chain7.3 Secret of Chinese Success
Conclusion

Overview

Cryptoeconomics is based on protocols of decentralized digital economics used to manage the production, distribution, and consumption of goods and services. With a focus on China, this book systematically sorts out the structure and background of the economic model derived from blockchain.