Cryptodynamic Principles

Cryptodynamics is a term coined here for the purpose of easily referring to the fundamental principles of Bitcoin. This is intended to both inform understanding of Bitcoin and differentiate it from other technologies. The principles are the minimal subset of cryptoeconomic principles necessary to achieve this objective.

While the choice of name is not essential, a rationale for it is provided below.

Crypto

“A crypto currency is a [money] that uses strong cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of [units].” - Wikipedia

Dynamics

“Dynamics is the branch of applied mathematics ... concerned with the study of forces ... and their effect on motion.” - Wikipedia

Crypto + Dynamics

Cryptodynamics is the set of forces that secure Bitcoin transactions by controlling (1) definition of units, and (2) transfer of units.

Principles

Security force is entirely human in nature. People must act to secure anything, including Bitcoin. As an economic system, Bitcoin can only expect people to act in an economically-rational manner (self interest). As such Bitcoin security forces are entirely based on the self-interested actions of individual persons, specifically:

• Risk Sharing
• Energy Sinking
• Power Regulating