Overview of Cryptoeconomics. Article translation
From the translator: this is a scientific text, a little out of context, but very, very useful. I wanted to publish it in my blog, but decided to first share it with the community here. If there are suggestions, how can you translate any sentences better, please write in a personal.
The science of cryptography has existed for millennia, but in a formal and systematic form - only a couple of decades, and can be defined as a study of communication in a competitive environment (Rabah, 2004).
Similarly, we can define cryptoeconomics as a concept that goes one step further, that is, the study of economic interaction in a competitive environment (Davidson, De Filippi & Potts, 2016; Ernst, 2016). To distinguish itself from the traditional economy, which certainly studies both economic interaction and counteraction, crypto-economics usually focuses on the interactions that occur over network protocols. Selected areas of cryptoeconomics include:
Over the past few years, we have witnessed the growth of crypto-economics,
which is largely due to the increase in the number of cryptocurrencies and digital tokens, which introduce new and interesting aspects to such a science as cryptography (Potts, Davidson & De Filippi, 2016). A little earlier, cryptography was, by and large, a simple computational and informational theoretical science, the security of which was considered closest to absolute.
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Once money comes into view, the ideal world of mathematics must interact with the real world and the social structures of society, economic incentives, relative faith and many vulnerabilities that can only be reduced,
but not completely remove. While cryptographers are accustomed to assuming the type “this algorithm is guaranteed to be indestructible, provided that the basic mathematical problems remain unchanged”, the world of cryptoeconomics has to be content with unclear empirical factors, such as difficulty with a large number of attacks, a sufficient number of disinterested, as well as interested in the profits of the parties, the level of concentration of various resources, and even take into account socio-cultural conditions (Ernst, 2016; Davidson, De Filippi & Potts, 2016).
In contrast, in traditional applied cryptography, security measures tend to look like:
On the other hand, in cryptoeconomics, the main security measures on which we depend look something like this (Ernst, 2016):
In this regard, it is important to note that there are additional assumptions regarding security that are characteristic of emerging problems. Thus, it is often, even impossible, to say with certainty that the problem that has arisen has been solved. It would be more correct to say that it will be necessary to create solutions that are optimized for specific empirical and social realities and continue to optimize them over time. (Ernst, 2016).
The translation was done by Elena Logacheva, corrected by Nikita Melnikov.
The science of cryptography has existed for millennia, but in a formal and systematic form - only a couple of decades, and can be defined as a study of communication in a competitive environment (Rabah, 2004).
Similarly, we can define cryptoeconomics as a concept that goes one step further, that is, the study of economic interaction in a competitive environment (Davidson, De Filippi & Potts, 2016; Ernst, 2016). To distinguish itself from the traditional economy, which certainly studies both economic interaction and counteraction, crypto-economics usually focuses on the interactions that occur over network protocols. Selected areas of cryptoeconomics include:
- Online trust and reputation systems;
- Crypto-tokens / cryptocurrencies, and, in general, digital assets;
- Smart contracts;
- Matched algorithms;
- Anti-spam and Sibyl-resistant algorithms;
- Activated markets for computing resources;
- Decentralized social security systems / social. assistance / basic income; Decentralized management (for both commercial and non-profit organizations).
Over the past few years, we have witnessed the growth of crypto-economics,
which is largely due to the increase in the number of cryptocurrencies and digital tokens, which introduce new and interesting aspects to such a science as cryptography (Potts, Davidson & De Filippi, 2016). A little earlier, cryptography was, by and large, a simple computational and informational theoretical science, the security of which was considered closest to absolute.
')
Once money comes into view, the ideal world of mathematics must interact with the real world and the social structures of society, economic incentives, relative faith and many vulnerabilities that can only be reduced,
but not completely remove. While cryptographers are accustomed to assuming the type “this algorithm is guaranteed to be indestructible, provided that the basic mathematical problems remain unchanged”, the world of cryptoeconomics has to be content with unclear empirical factors, such as difficulty with a large number of attacks, a sufficient number of disinterested, as well as interested in the profits of the parties, the level of concentration of various resources, and even take into account socio-cultural conditions (Ernst, 2016; Davidson, De Filippi & Potts, 2016).
In contrast, in traditional applied cryptography, security measures tend to look like:
- No one can perform more than 279 computational steps;
- Factor operations remain constant (that is, polynomial) (Rabah, 2005);
- The adopted n-th roots of the composite modules are unchanged;
- The problem of the discrete logarithm of an elliptic curve cannot be solved faster than 2 ^ n / 2 times;
On the other hand, in cryptoeconomics, the main security measures on which we depend look something like this (Ernst, 2016):
- None of the persons controlling more than 25% of all computational resources can collude;
- None of the persons controlling more than 25% of all monetary resources can collude;
- The sum of the calculations of a certain proof of a working function that can be performed with a given amount of money is not superlinear beyond the point, which is quite low.
- There is a small number of altruists and the same small number of crazy or political opponents, so most users can be modeled as economically rational.
- The number of users in the system is great, and at any time users can appear and disappear, at the same time, at least some of them will be permanent.
- Censorship is not possible, and the transfer of messages between two nodes occurs relatively quickly.
- It's easy enough to generate lots of IP addresses that give unlimited
- network bandwidth.
- Most of the users are anonymous, in connection with this, negative reputation and the appearance of debts are practically impracticable.
In this regard, it is important to note that there are additional assumptions regarding security that are characteristic of emerging problems. Thus, it is often, even impossible, to say with certainty that the problem that has arisen has been solved. It would be more correct to say that it will be necessary to create solutions that are optimized for specific empirical and social realities and continue to optimize them over time. (Ernst, 2016).
The translation was done by Elena Logacheva, corrected by Nikita Melnikov.
Source: https://habr.com/ru/post/338638/
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