Local crypto-tokens for local economics

Abstract

Major blockchain projects, such as Bitcoin and Ethereum, enable secure global transfers of tokens between untrusted parties. The resulting global financial infrastructure however incurs latency and costs that are prohibitive for many economics applications that are local to a region or a community. Local economics relies on trust and reputation through repeated interactions within a community of participants that know each other, which has not previously been leveraged for the design of crypto-tokens. In this paper, we formulate the design of new local crypto-tokens as a research problem: we present concrete application examples, we identify double-spending detection as a weaker and sufficient alternative to double-spending prevention in local applications, and we formulate desired properties of new local crypto-tokens designs. Based on our analysis, we envision local crypto-tokens to complement existing blockchain projects by facilitating intra-community economics at much lower latency and costs, while evolutions of current blockchain projects will provide global inter-community exchanges of high-value transactions.