Blockchain: More economics, less tech

Blockchain is about creating better economics; the technology is incidental.

A decentralized append-only ledger that maintains integrity via cryptographic..blah blah blah….

What is an economy? It is a bit like team sports. You define who the players are. Who keeps score. What are the rules to pass the ball around. Who wins, who loses. Throughout history, the rule of this game have evolved to create new equilibria in our economic life. Humans were hunter-gatherers, then farmers, then specialized labor, then factory workers, then office desk warmers. Through a combination of technology, government, interplay between capital and labor, we have created many different kinds of these games economies in several thousand years of civilized living. There is a range, from Hong Kong (free market) to Venezuela (communist), from free-form black markets to regulated weapons.

For the first time in history, we are able to define new economies, with pre-set protocols rules, and efficient exchange of peer to peer value.

Enter Blockchain. For the first time in history, we are able to define new economies, with pre-set protocols rules, and efficient exchange of value. The technology behind all of this has existed for decades – what’s new is its application in efficient economics. No human intermediaries (Blockchain itself is an intermediary, but it’s transparent and predictable via code), a currency (e.g. Bitcoin) to exchange value, and tokens to represent real-world assets. There can be permissioned Blockchains, that will likely mimic merchant guilds of the past. There are open Blockchains – that’s where the most potential lies – akin to self organizing street markets.

This is the real promise: bespoke, efficient economies, that allow trade between peers, with optimized ways of exchange. It is easy to be enamored with the tech; real value is in the economics.