Section six intro: Crypto economcs

The economic forces behind Open Money

So far in this project, we’ve described Open Money in ideological or technological terms. We use concepts like decentralization, permissionless, and cryptography to try and understand what makes Open Money different than other money systems that have come before. But we haven’t spend much time talking about are the economic forces that both enable and accelerate Open Money’s adoption.

If we really want to understand Open Money than we have to map its economic terrain.

Crypto economics: Code as an economic substrate

Crypto economics is the heart of Open Money. And the best way to explain crypto economics is that it’s like a wonky intersection between computer science and economic game theory. But the key thing to understand is that we are not talking about digital money, or It’s not just about money over internet protocols. Instead, we’re talking about the incentives made possible by the internet that to shape human behavior at scale.

Where traditional economies rely on institutions to enforce trust, crypto economies create trustless systems based on code. Smart contracts replace agreements. Blockchains replace auditors. Incentives become deterministic, rather than discretionary.

This should start to sound like a new way of coordinating and organizing, because that’s what it is. It’s a new system that leverages the low-cost, easy-access, and constant connectivity of the internet as it’s main point of leverage.

Take the mining or staking process in blockchains. These systems aren’t just secure because they’re decentralized. They’re secure because participants are economically motivated to play by the rules. Cheating is possible. It’s just unprofitable.

In crypto economics, truth becomes the path of least resistance — and greatest gain. This is also known as incentive alignment.

Game theory: alignment through incentive design

Game theory is the skeleton key of Open Money. Each protocol is a live simulation, a Petri dish of self-interested agents reacting to each other under conditions of economic pressure.

Designers don't just ask: "What should people do?" They ask: "What will people do when money is at stake?"

Mechanism design — the reverse engineering of game outcomes — is used to craft systems where cooperation becomes the equilibrium. Bitcoin’s halving cycle, Ethereum’s burn mechanism, DAOs with quadratic voting: all are experiments in incentive choreography.

While that might sound flat, what makes crypto economics so interesting is that it is dynamic. Each move creates new actions and reactions.

Network effects: value scaled through participation

In traditional markets, products get better as they improve. In Open Money, systems get stronger as more people use them. This is the network effect. Earlier we talked about the network effects from a technological adoption perspective. But network effects also have an impact on economics.

One user on Ethereum has little impact. Ten million create a self-reinforcing loop of liquidity, infrastructure, and innovation. More developers mean more apps. More apps mean more users. More users mean more transactions — each feeding back into the system.

This is why blockchains bootstrap not just users, but economies. The network is the market.

Gas: the economic physics of computation

Gas is one of the most misunderstood economic elements of Open Money. On Ethereum and similar platforms, gas is the cost of computation —a way to price execution in a decentralized computer.

But gas isn’t just a fee. It’s a throttle, a spam filter, a market for processing power. It turns computation into an economic activity, where efficiency is rewarded and excess is penalized.

Imagine if every web API charged you to use it—not to extract rent, but to ensure the system stayed alive. Gas, paradoxically, keeps the machine honest.

Coordination without corporations

Open Money has also given rise to a new form of capitalism — open source capitalism. Here, protocols become platforms, and contributors are paid not in salaries, but in tokens that reflect ownership and alignment.

GitHub meets Wall Street. Coordination without corporations.

This flips the traditional startup script: instead of building a product and hoping users come, you build a network and let users become co-owners. Value isn’t extracted from the edge. It’s created at the edge and absorbed back into the core.

What we’ll talk about in this section is the idea that Open Money is propelled by a new kind of economic logic. One where incentives are programmable, participation is profitable, and trust emerges not from authority but from alignment.