BLOCKCHAIN TECHNOLOGY: PANDORA BOX OR SURPRISE BOX?

VERSÃO PORTUGUESA DISPONÍVEL AQUI

Economies of scale, characteristic of the industrial age, have determined until now the competitiveness of centralized organizations, colossal both in public and private sectors, which represent political and economic interests that are very well-entrenched in contemporary society. However, especially thanks to “Blockchain Technology” (BT), there is for the first time in history a clear possibility that the benefits of many projects may revert to DECENTRALIZED entrepreneurial communities, and not just in favor of traditional businesses and other CENTRALIZED institutions whose performance results in higher transaction costs and also considerable agency costs (which are due to the inevitable conflict of interests that occur when the things are not managed by their owners).

Probably in the near future, the driving force of the most promising projects will be measured by the price/utility of the respective “tokens”(computable units representative of a given value or functionality), which will be transacted/used by networking members of such communities.

As economists surely know, the value of things can be measured from two perspectives: the value of using those things (“use-value”) and the value that can be obtained by exchange them (“exchange-value”). The use-value is easy to SHARE on the Internet and this is nothing new. The novelty is that thanks to the advent of trust-generating protocols based “only” on mathematical accuracy (!) the exchange-value can now be TRANSACTED in a “peer-to-peer” (P2P) basis on the Internet, making trusted intermediaries obsolete and this is also a reason why the world may change faster than what is believed…

Thus, from now on, any trade that can be decentralized will tend to be decentralized (as is already the case with respect to “sharing stuff” on the Internet) and any value proposition, both tangible and intangible, that can be “tokenized” will tend to be “tokenized”. This P2P networking effect not only creates more utility globally as it has done so far (“Metcalfe’s Law”) but now also creates more value-for-money and I strongly believe that this atomization will make decentralized communities and distributed autonomous organizations (DAO) more competitive than any centralized organizations.

It should be noted how the collective action of community members can be encouraged by the individual ownership of the said tokens. For the first time, in addition to the already proven exponential effect on the utility value of things shared on the Internet, the simple fact that community members become unequivocal owners of tokens which can now be created and transacted in a decentralized way (this is an historical landmark determined by BT) will provide an unprecedented level of collective action. This is so because the desire for exchanging things that we need is even more powerful and motivating than the nice feeling for sharing them…

This new reality will turn “collective action” into an antithesis of “collectivism” which is typical of states with planned economy and no private initiative (having visited the former East Germany several times in the 1980s, I witnessed the demotivation that such political-economic systems can provoke). As diligent owners of tokens which have such granular and divisible values that they’ll fit in practically every service and every wallet, the members of each community will be intrinsically motivated to carry out the marketing and many other aspects surrounding community projects.

It is important to note that probably these projects will not be centrally driven, but rather will be managed by the referred DAO which will obey to consensual protocols that result from elections where each individual will vote “by his own feet”, in this case by betting their own tokens (consensus mechanism titled “proof of stake”). Therefore, it will be possible for these organizations to execute “smart contracts” which will be deployed in programmable computer networks (for example, “Ethereum”), being that the success of such business will dictate the prosperity of each community project and the value of their respective tokens.

Given the technological emancipation of their members, I think these networked communities will be much more competitive than any centralized institutions. So, I foresee that such communities will take ownership of many products and services available in the market (a new kind of competition that may one day extent to political choices…), conquering goodwill and gaining market share (and wallet share) to the detriment of predecessor centralized organizations as such as the most successful  businesses of the industrial era: the multinational firms.

Even given the natural resistance to change and more than a certain opposition of many established powers, I believe Blockchain is a game changer technology that will bring about great changes. As for us, instead of trying, ingloriously, to re-cover such a powerful box, I think we should work to get out of this box new applications that may be more hopeful than fearful …

Dario Rodrigues

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