There is much fog of semantic noise and confusion surrounding the sphere of ‘crypto economics’ and a real need to adequately define our terms within a framework that puts things in their proper context.
Others have by now voiced similar opinions and concerns elsewhere (e.g., known security guru Bruce Schiener).
Let us begin with the very term ‘cryptocurrency’ (which unfortuantely stuck) — ‘currency’, although etymologically implying a ‘current’ or ‘flow’ (which could, arguably, in a sense be correct, especially if taken in its Keynesian sense of ‘capital flows’, but there’s still something fundamentally amiss, as ‘cryptos’ first and foremost imply structure) immdiately first bring associations with fiat currencies, or government backed and issued paper money.
DIGITAL ASSETS (let’s call them that, or ‘crypto assets’ if one so prefers) are an entirely different animal, qualitatively, in kind and nature.
Their value, in the long haul, derives from their utility function and network effect rather than consensual public trust in people’s governments (credit, from Lat. credo, “to believe”, “trust”).
The term “actor(s)” is often used in relation to ‘crypto economics’ (e.g., the heterogeneous nature of the ‘actors’ in the bitcoin network — miners vs. users, etc.), so at this point it only makes sense to introduce actor-network theory (ANT) as the framework within which to think about ‘crypto’.
ANT is a theoretical-methodological, material-semiotic approach to social theory where everything is put in on ‘equal ontological footing’ (‘flattened’), meaning that objects, ideas, concepts, symbols, machines, algorithms and processes are just as ‘real’ an agency as human actors in exercising effects that affect the whole network of constantly shifting relationships.
ANT states that social forces do not exist in themselves and therefore cannot be used to explain social phenomena, but instead strictly empirical analysis should be undertaken to “describe” rather than “explain” social activity.
‘Ecosystem’ and ‘ecosystems’ in that sense are very adequate terms (“the Ethereum ecosystem”, etc.) and so are ‘tokens’ which ANT defines as things that come into being through the successful interactions of their corresponding actor-networks, which by being increasingly transmitted and passed through the network become increasingly punctualized and reified.
In the current state of market efficiency (efficient market hypothesis rather in the sense of Leibnitz and the ‘best of all possible worlds‘) technical analyses are little more than one’s crystal ball of subjective bias.
My personal strategic approach to the ‘crypto’ markets is rather based on the fundamentals of the particular technology (white paper, github statistics, code review, developer team, etc.) and extrapolating Warren Buffet’s tactic of picking what is currently undervalued (but then again, I also avoid day trading and tend to be highly risk averse).
There’s three main properties and corresponding problems to digital assets and the ecosystems they relate to:
Obviously, one cannot fully have all three and there’s always some degree of trade-off (e.g., sacrificing decentralization for scalability, etc.) depending on the intended functionality the system is designed for.
However, blockchains appear to have the very important property of being robust or even anti-fragile — that is, whatever vulnerability in the network is exploited (followed by a price drop) tends to quickly be fixed, learned from and followed by recovery and even spike due to the nature and topology of how distrubuted networks operate and structure themselves as an orchestrated ensamble within a hard-coded ‘fat’ protocol below a thin, amendable application layer along the immutability of the blockchain itself.