Vitalik Buterin, co-inventor of the Ethereum protocol, explained in an interview a few hours ago his vision of the economy of the future, the so-called “Cryptoeconomics”, which can have different rules than those of the traditional economy.
According to Vitalik, this branch of the economy will not follow the traditional juridical laws, but those of programming, for which it risks placing itself at a different level of ethics, which must be planned a priori.
In his words: “Whatever your rules are for rewarding, penalizing inside of the mechanism, they have to be specified as a piece of Solidity code, Viper code, whatever programming language you’re using in that set. That’s a much tighter constraint than policymakers writing laws have.”
The crypto-economy takes these limits and adds portions of other knowledge such as hash functions, algorithms, signatures, zero-knowledge proof and consensus, all this comes to constitute the set of rules of the new economy.
According to Buterin, what the economy should give us – and has not yet given us – is to stimulate and motivate social interactions.
Vitalik also believes that cryptocurrencies and blockchains have increased cultural evolution through the integration of the concept of decentralization, which has influenced methodologies of collaboration. What is being created is a great economic and financial experiment in which the handling of money, in the form of BTC or ETH, takes place without commissions, in a way as simple as sending an email.
Needless to say, Vitalik’s concerns about scalability are also not mentioned, a topic he considers essential for the improvement of the blockchain, in order to increase the number of transactions that can be carried out in a certain period of time.
From a legal point of view, however, he does not believe that many innovations are necessary but, more than anything, he believes that we should work on the concept of financial literacy, applied to the cryptocurrency environment.
With regard to the evaluation of cryptocurrencies, Vitalik believes that two completely different points of view must be evaluated: on the one hand, considering cryptocurrencies as companies, especially when there are transaction costs that are distributed within the blockchain for transaction validation. In this case, economically attractive valuation values are reached.
On the other, we should use the Quantitative Theory of Money, according to which: M X V = P X Q.
This means that there is an almost perfect correlation between the quantity of money (M) and the speed of circulation (V), and the price (P) for the number of goods (Q).
It is an extremely classicist, pre-Keynesian economic vision, which astonishes coming from an exponent of the most advanced economy. However, for Vitalik, the history of the project is more important than the evaluation model.