When creating a network based on a blockchain or other DLT system, you’ll face questions about tokenomics. Tokens can be used for many types of data, including identity documents, voting records, contracts, game characters, stock ownership, usage rights, and more.

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Cryptocurrency economics or cryptonomics is the economics of cryptography-based currency and networks. Yes, cryptonomics can help investors make better investing decisions, but it’s more important than that.

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The most famous chart in economics tells us that market price is a function of supply and demand. Good token economics design involves driving demand with fundamental value, but also carefully managing the supply side of the equation.

One challenge in the blockchain/DLT industry is how to design token systems in a way that makes it harder for price movements to be manipulated or falsified.

Why is it important to have verifiably accurate market price data for token values?

If you’re raising money with an ICO, one of the big challenges is figuring out what price to charge for your token. If you’re an investor, your decision to buy will hinge on whether you think a token’s price is higher or lower than it should be.

Understanding pros and cons of blockchain economic systems is important when a business is deciding which blockchain platform to use to launch an ICO or utility token.

This is the second of a two-part series on blockchain economic systems. Read about the foundations of single-coin systems first. 

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