Cryptonomics

In it's simplest form Cryptonomics is the combined use of economics and cryptography to manage the functions of participants using a network.

Cryptonomics comes from two words: cryptography and economics. Using a blockchain allows us to take advantage of dynamic features of cryptography that include mathematics, game theory, systems design and other areas related to economics and information sharing. Features put cryptography in a different category— a tool/service —instead of an area mainly concerned with simple information sharing and privacy. Otherwise, cryptography is typically pursued by hobbyists/academics and considered less by the general population.

Cryptonomics sets a standard: users of a network may receive their incentives without the need of a third party. Meaning that it forms a major part of decentralized networks where there is no need third party verification. (See; Trusted Third Parties are Security Holes by; Nick Szabo)

Practical Cryptonomics uses:

Creation of peer-to-peer networks - Possible to develop peer-to-peer networks, these systems have minimal and manageable weak points and very rare for glitches to occur.

Establishing reliable agreements - cryptonomics is also a crucial part of creating effective agreements that can be executed without any issues happening. But all parties involved must come to an agreement and cooperate in order for the process to go smoothly.

Applying incentives in peer-to-peer networks - All participants in the network can receive their incentives without having to stress. Offering these incentives gives the developers leverage to guide the trends and activities that happen on the network.

Creating more secure networks - With the combination of cryptography and incentives that has create the development of a renewed system of decentralized networks, which is more secure and much more sustainable in the long run.

The economics part of the equation is what gives a blockchain unique capabilities. However, the blockchain was not the first time that a decentralized peer-to-peer system was used to freely transfer value.

For years, torrent sites have used peer-to-peer networks to share files or information. The data gets secured by advanced cryptography, then it can get sent between users for a sum or none— not including the fees to use the network —and the exchange is direct. (Cryptonomics)

Some suggest that Cryptonomics allow for micro-economies to flourish; paving the way for participants of a network to receive incentives without the need of a third party.

The main functions of Cryptonomics are to properly incentivise users, builders and planners while allowing for managers, designers, developers and capital funds to work together with transparent systems underneath. Removing costly— and often inefficient —intermediaries that would be needed to file paperwork, process fees and settle arrangements.

Applications of Cryptonomics

Secure peer-to-peer networks - Using the features of Cryptonomics it is now possible to develop and establish secure peer-to-peer networks. These systems have minimal and manageable weak points, Which also makes it very rare for glitches to occur in these systems.

Establishing reliable agreements - All participants that are in the network can receive their incentives without having the need to worry or stress. The reason for offering incentives is to give the developers leverage to help guide the trends and activities that are happening on the network.

Creating more secure networks - With the combination of cryptography and incentives it has assisted the development of a renewed system of decentralized networks. Which is more secure and the new system is more sustainable in the long term.

The Cryptonomics concept has become a vital part of designing decentralized networks. It is in support of a transparent system that rewards all of it's participants. The model can also be applied to improve token distribution processes and a fair management plan. The cryptonomics model has been tested in real time settings and the good results create opportunities for even more efficient and reliable decentralized networks.

The main purpose for Cryptonomics is to use it for properly managing design development, fund management and how decentralized networks function.

Applications for Cryptonomics

Creation of secure peer-to-peer Networks - With using the features of Cryptonomics it is now possible to have secure peer-to-peer networks, that have minimal and manageable weak points and is very rare for glitches to occur.

Establishing reliable agreements - Plays a very important part in creating effective agreements that can be executed without any issues happening. But in order for this to happen all parties involved must cooperate for the process to go smoothly.

Applying incentives in peer-to-peer networks - All participants can receive their incentives without having to stress. Offering these incentives gives the developers more leverage when it comes to making decisions about the trends and activities happening on the network.

Creating more secure networks - The combination of cryptography and incentives has fostered the development of a renewed system of decentralized networks. Which is more secure and also the new system is much more sustainable in the long run.

Bitcoin mining and Cryptonomics

Since it's launch Bitcoin has supported a vastly growing network where users are able to get value for services and transactions without restrictions. And since the bitcoin transactions are transparent which is what makes it so appealing to users in turn increasing the trust that they have when using the system. Bitcoins sustainable mining process makes bitcoin able to do all these things.

Bitcoin miners are also able to validate transactions on the network, and are paid in bitcoin for their work. In anticipation for the incentives for their work the miners are encouraged to work harder which keeps the network running smoothly and securely. In order to complete the mining process successfully a complex mathematical calculation must be done. That is related to the Cryptographic hash algorithm. This math is necessary because the hash algorithm binds the different blocks to the blockchain. That is how the system is able to produce accurate records of completed transactions along with their time stamp. This whole setup is called the blockchain.

In conclusion, It supports a transparent system that rewards all of it's participants, even more the model can be used to achieve greater token distribution processes and a fair management plan. The Cryptonomics model has been tested in real time settings, and the outstanding results create more opportunities fro more efficient and reliable decentralized networks.