Ted Talks: How The Blockchain Will Radically Transform The Economy
For close to a hundred years, economists have been exploring people’s behavior. The primary focus has been to understand how they make excisions, how they act individually and while in groups and better still, how they exchange value. But despite having studied the institutions that facilitate trade, like legal systems, corporations, and marketplaces, blockchain sets in as the best technological institution that will fundamentally change how we exchange value.
Bettina Warburg says that the technology could be new, but it is somewhat a continuation of a very human story. Apparently, people will always find ways and means of lowering uncertainty about each other in an effort to exchange value.
So what is the blockchain?
It is a public registry that has decentralized database, which stores a record of assets and transactions across a peer-to-peer network. The transaction history gets locked in blocks of data before being cryptographically linked together and secured leading to the creation of the unforgeable record of all the transactions. Unlike what many people would think, it is neither an app nor a company. Instead, it can be referred to as a composite view that’s always changing and being updated.
Given that it stores words and images, it would not be wrong to think of it as a history of custodianship, ownership and location of assets the likes of digital currency Bitcoin, digital assets such as a title of ownership of IP, a certificate, a contract, or even personally identifiable information.
But how do blockchains lower uncertainty? How do they transform the economic systems?
Human beings have to embrace three types of uncertainties; not being sure whom they are dealing with, not having visibility into a transaction and not having a way out if things go south. Blockchains allow for us to create open and global platforms, which can be used to store attestation about any individual resulting in a user-controlled portable identity. The presence of a portable identity in the physical world and the digital world implies that all kinds of human trade can be executed in new ways. That said uncertainties should not slow us down. Instead, we can use them to collaborate and exchange business in a faster and open manner.
But let no one think it is a solution to everything. While blockchains give us the technological capacity of creating a record of human exchange, Warburg emphasizes that they should be mistaken as a solution to everything. Apparently, the media purports that it is going to end world poverty. There is also the thinking that it is going to resolve the fake drug problem. What should be understood is that the technology is still making baby steps. Thus more experiments will be of the essence. It should not also be mistaken for an economic evolution.