In today’s newsletter, we have a guest piece on incentive structures in a centralized fiat world and crypto world authored by Arjun Chauhan, Varun Vruddhula (@GandalfTheBr0wn
)and BKS (Balaji K Srinivasan). BKS ( ull disclosure - one of ZPX’s earliest supporters), along with Balaji S Srinivasan (@Coinbase/A16Z/21.co) co-founded and exited a company called Counsyl, and were at Stanford at the same time, before falling down the crypto rabbit hole together fairly early in the cycle.
“Why should we care? Why does computer money have value? What is Fiat money?“
Some fundamental questions regarding economics, monetary policy, game theory, and computer science are explored in a new fascinating blog series, A universal framework for understanding incentive design in crypto and fiat systems.
Selected excerpt: In order to change a prevailing extant system, one must first understand the system itself and that it is the nature of the system to resist a change. To solve the Coordination Problem, one must first understand clearly (a) how existing third-party enforcement rule systems work to create trust and (b) how the Bitcoin solution and its proposed decentralized governance system can provide a clear advantage to network users over Fiat at the level of incentive design.
What we found useful in the ongoing viksavaakya is a universal framework that can bring clarity and fine-tune our approach to enable such a transition and successfully create a decentralized economy.”
Read the full story here.
You might have to read this a couple of times to completely ‘grok’ the essence of it tbh, but is well worth it.