Note that some of the concepts we rediscovered with Blockchain were part of a book written by Hernando de Soto, a Peruvian economist. This article analyzes some of those topics from a functional and practical perspective, based on what Blockchain technology enables, and that other disruptive initiatives are leveraging now.
Integrating dispersed information into one system
This is also called information asymmetry, which pushes parties to make decisions based on limited information. Also, some of these centralized systems had rules and benefits inherent to them, just for the ones that belong to that ecosystem. Today, this “idle capacity” is being leveraged by other centralized entities taking advantage of the sharing economy mindset (e.g. Uber, AirBnB). Same applies to all the capital that is not formalized by a centralized economy.
Making people accountable
People should be accountable before the centralized system. All the trust based on communities and peer “trust” should no be longer needed. Some systems in which peer trust is the key are as important as systems based on rules and controls. Look at open source software’s open collaboration and peer production models for a good example, and peer reputation (e.g. online marketplaces).
Most transactions are protected by an entity offering the service. See those ledgers hosted by banks, with a set of rules that help make those transactions. Today, even those centralized transactions are organized in a way that the silos created advantages for intermediaries and other entities. If everybody trusts a distributed ledger to have the truth about transactions, or even more, there is no need for protection for some information (and can be public), that protection might not be gone but evolved in a new way. A lot of this is currently supported by strict regulations.
These concepts are well developed in the book’s Chapter 3, and also on this article, a summary of that Chapter was published on the International Monetary Fund website in 2001.
This article was published originally on Medium, October 2017