What are tokenomics?
The token economy or tokenomics, seeks the creation of an economic ecosystem supported by tokens. An ecosystem where everything is sustained by the different possible interactions with said tokens. In this way, the ecosystem is exclusively made up of tokens that represent real assets.
This asset can be anything. A work of art, a book, a blog post, a song, a scientific study, real estate, a car, and even financial assets that we are already used to. The true power of the token economy is that it allows us to transfer any type of value from the real world to the virtual world. But not only that, the token economy allows us to decentralize its control.
But the development of this new concept of the economy goes through the construction of blockchain technology. And the reason for this is very simple: tokens may exist, but without the blockchain, there is no token economy. This is because the blockchain is the means to achieve the necessary decentralization that the token economy demands.
But in addition to blockchain technology, what other elements are necessary for tokenomics?
Provide price stability
One of the biggest challenges of the token economy is to achieve stability in their prices. Price fluctuation becomes a serious problem when unscrupulous third parties can exploit them for profit. A process that makes the network unsustainable and no longer viable. Given this, another important point for the viable creation of a token economy is to find a means to stabilize token prices. All this to encourage the use and adoption of the token in question and continue with its development.
Governance
Another important aspect in the token economy is governance. Through governance, the community is actively participating in the decision making. At this point, the governance rules can be diverse. In Bitcoin, for example, governance is decentralized, progress is made in the development of the network thanks to the intervention of the community that develops it.
However, other projects have more or less decentralized examples of governance.
Utility in the real world
Another important aspect of the token economy is the utility that said token has in reality. A project that adds value to the real world is a project worth developing and investing. Another important point in this regard is to recognize if the token is fungible or not. This feature will dictate the actual usefulness of the token for a given project.
Importance of tokenomics
Tokenomics allows the creation of self-sufficient economic systems. In this sense, blockchain technology has allowed these systems to begin to develop in different use cases.
Each development with its principles and ideas, but in general all under the concept of allowing economic microsystems to evolve within their own rules. This clear diversification will lead to many projects being carried out successfully and others not. But in general, those who achieve it will have a clear impact in the real world by allowing the tangible to be brought into the digital world, tokenizing it, and allowing us to interact with it uniquely.
Links
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