Next week I will be in New York. We are working on resetting the cryptoeconomics agenda. I will publish a couple of texts here about it too. We will have a pretty good crew at work, world class political economists, economic anthropologists, finance theorists, including professors Dick Bryan (the author of Risking Together and Capitalism with Derivatives), Benjamin Lee (Derivatives and the Wealth of Societies), Jonathan Beller (Computational Capitalism) and Robert Wosnitzer (cultures of finance specialist) – all now really deep into crypto economy and, especially, into finding out and prototyping what a token can do.
Below the program, reading list, and introduction, you are very welcome if you are interested in such stuff. The entrance is free, but requires registration beforehand. It’s gonna be hard core. We are going to talk a little about our work on the Gravity distributed runtime and protocol for creating distributed applications, and on Space, our SDK for creating programmable economies, too. Gravity Architect Jorge Lopez (also a gifted financial engineer!) is with us also.
Here is a reading list:
Session 1: Valuing tokens. Fundamental value and crypto economy
Wednesday, 5/16, 4–6pm
Session 2: Designing tokens that are neither equity or debt. Derivatives as the key to understanding dApps (aka tokens)
Thursday, 5/17, 5–7pm
Session 3: Token offer as an option. Gravity protocol for protocol creation, Space pattern language for economic-organizational interactions.
Friday, 5/18/18, 10am-12pm
The idea that innovations in funding break open existing knowledge is not new. Myron Scholes, the co-founder of the Black Scholes options pricing formula, contends in his Nobel prize speech that debt and equity are historically specific modes of existence that enable least-cost means of funding activities and that, with time, new categories of funding would arise (along with new attributes).
The rise of joint stock company and stock markets in 1840s transformed capitalism. By then capitalist enterprise had reached a stage of growth that required large scale investment beyond the capacity of rich owners (private companies/partnerships). The revolution started in Britain, where the two-century-old legislation that had banned joint stock companies as purely speculative, disruptive ventures was repealed. With the change of law large quantities of investment capital could now be mobilised and ownership could be sold in small parcels, and those parcels traded in a secondary market — the stock exchange. This changed capitalism from being about the discretion of a rich elite into a calculative logic, with industry run by professional managers and where shareholders’ desire for financial returns impose a direct discipline on management strategy. This development was associated with the replacement in business of gold by paper money (credit) and, with investment in technology, came incorporation of labour into the logic of capital, in the creation of what Marx called ‘relative surplus value’. A whole new “mode of production” was born.
Cryptographically enabled distributed economic-organizational systems, aka “tokens”, are currently changing again the conventions of economic organization.
How is value created, captured, distributed and exchanged, what is money, how people incorporate into production, are changing as radically as the first generation internet changed the way we communicate and relate to the presence of others.
What are tokens? What is issued at an ICO, what becomes owned? Are tokens equity? Central bank money? Private bank debt? Or something else? Are they a gift, a bid, a gamble? If Scholes is right that financial instruments are historically specific, then are the categories of money and asset simply limited in their ability to give us paradigms through which to think about tokens? Perhaps tokens are more like derivatives (purchases of risk exposure, not just asset ownership), designable so that people risk together, not individually. Perhaps the issuance of tokens is best understood as crowdfunding, or investment banking, or building a collective. What are tokens? Why are they important? What can they do?
The Working Sessions on Cryptoeconomics at NYU/STERN invite you to a deep inquiry into the reasons for building the token economy. It is not just another tech sector. It is a possibility to do economy differently.
What, after all, is the reason for building the token economy? Finance is moving beyond a discretely delineated category of money as an ‘independent’ measure of the ‘real’ economy. With financial innovation, many assets acquire the liquidity of ‘money’, and as a consequence the distinction between money and other assets is breaking down. The sociality of money starts to reveal itself: fiat currency codifies a certain system of accounting, ownership and distribution. Money is a social relation, not only a technical mechanism. Cryptotokens are about exploring and re-engineering that sociality, building alternatives in service of a different economy. The question of how to do economy differently takes on new weight when it becomes possible to create answers; that is the fundamental value of token economy. Opening economy as a design question.
Session 1 : On valuing tokens. Fundamental value and crypto economy (Wed 5/16/18, 4–6pm)
In their money role, crypto-tokens can be an alternative unit of account, not just a means of exchange. They open a possibility to invoke a new measure of value, not just facilitate new processes of trade. As such, tokens can have a ‘backing’ in the value of output they facilitate, and not function simply as tools of speculative position-taking. Here is their radicalness, that they open a possibility of re-thinking and re-engineering what we understand by production. What are the new social units of production? How is such production measured as a social contribution? How is output distributed, accessed and owned? Re-defining and re-measuring production provides the material basis of the crypto economy — a basis that gives crypto-tokens a long-term future as the currency of an alternative economic logic. A different way of doing economy.
What is a crypto economy: economy as a design question Akseli Virtanen, PhD, Co-founder, Economic Space Agency
Tokens as units of account. Bringing fundamental value to crypto economy Dick Bryan, Prof. of Political Economy, Sydney University. Chief Economist, ECSA
Logic of the gift and derivative VS. logic of contract and money Benjamin Lee, Prof. of Anthropology and Philosophy, The New School, NYC. Adviser, ECSA
Finance as an expressive medium Jonathan Beller, Prof. of Critical and Visual Studies, Pratt Institute, Brooklyn. Adviser, ECSA
Session 2: Designing a token that is neither debt or equity. Derivatives as the key to understanding distributed applications aka tokens (Thursday 5/17/18, 5–7pm)
We don’t know yet what tokens can do. To approach tokens only as “money” or “assets” is to approach through an old paradigm. In their ownership role, crypto-tokens can be derivatives (purchases of risk exposure, not just asset ownership) designed so that people risk together, not individually. They are distributed economic-organizational systems. Organizing tools in the interactive logic of contingent claims and speculative positions. Just like derivatives, tokens can work as collective tools, as collective approaches to risk taking, as ways to share the upsides created by facing change (volatility) together. Can we think, design, and use these decentralized organizational-economic applications (these “tokens 2.0”, these “cryptographically enabled distributed economic and social systems”) as derivatives in precisely this sense? Can we think them as a new value form?
Cryptographically enabled economic-organizational system as derivatives Akseli Virtanen, PhD, Co-founder Economic Space Agency
The social logic of the derivative Robert Wosnitzer, Prof. of Management Communication, NYU/Stern. Adviser, ECSA.
History of derivative finance Benjamin Lee, Prof. of Anthropology and Philosophy, The New School, NYC. Adviser, ECSA. Anthropologist of volatility and derivatives, author of Derivatives and the Wealth of Societies.
Options as social (not only financial) risk contracts Dick Bryan, Prof. of Political Economy, University of Sydney. Chief Economist, ECSA. A key theorist of derivative value form, the author of Capitalism with Derivatives.
Session 3: Token offer as an option and a derivative on the value created in the ECSA ecosystem (Friday 5/18/18, 10am-12pm)
Economic Space Agency is a group of radical economists, finance theorists, computer scientists, software architects, game designers, peer production experts, and decentralized application engineers — exactly what is needed to reimagine what economy can be. ECSA is working on creating the new stack of economic and informational freedom. The ECSA stack in incubation:
Gravity is a resilient distributed application runtime that empowers safe computational semantics, cryptographically secure protocols and orthogonally persistent state. The Gravity protocol is a language based on lambda calculus, prototypes, object capabilities and message passing to create distributed applications. Gravity Applications are executed on top of this runtime, and selectively share protocols, state and computation. Gravity provides informational freedom by shifting computational power securely back to the nodes of the network, allowing control of our own computation, computational resources, and access to them.
Space is a SDK for cryptographically enabled distributed economic-organizational applications, AKA “economic spaces”, “tokens 2.0” and “networks of contingent claims.” Space is a modular pattern language for economic interactions, enabling not only decentralized exchange, but distributed value production and its organization and governance. In Space:
- all data has the capabilities of a token, allowing it to also behave like a token (allowing the security and distributability of a token, capturability of value, and distribution of governance)
- all interactions are capable of being articulated as offers, making them potentially economic
- all relations are capable of becoming organizational/governmental (persistent, path creating), establishing programmable organizations and governable business logics
- all created economies (“economic spaces”) are fully executable: whatever you express can be run as an actual economy
Space provides economic freedom by turning economy into a mode of expression and a place of creation (allowing everyone to become an economic pattern creator, a writer and reader of derivatives).
Xccelerator provides psychological and affective freedom from the old patterns of the old economy. It is an incubator-accelerator of new economic space creation and implementation, for exploring new ways of doing economy. The Cryptoeconomic Working Sessions at NYU/Stern are organized by the ECSA Xccelerator.