In this article, Chris Berg, Sinclair Davidson and Jason Potts of RMIT Blockchain Innovation Hub (Melbourne, Australia) argue why a blockage can become a more subversive technology than the so-called “multi-purpose technologies” Cryptoeconomics that have changed society over the past few centuries.
Cryptoeconomics has turned into a rich field for research, but studying blockage should not be provided only to programmers and game theory specialists.
The emergence of blocking technology raises many complex issues in the economy, public policy, jurisprudence, sociology and the political economy. What we call “institutional crypto-economics” is based on a simple thesis: blockade is not just a new multi-purpose technology, but a new institutional technology.
Perhaps it will sound pedantic, but the difference between these two concepts is enormous. Multipurpose technologies help us do something better, faster and cheaper. Economists consider multi-purpose technologies (for example, steam energy or semiconductors) as excellent engines of economic growth.
Of course, blockade is a technology of wide application. But it’s not so simple.
Blocking is more of a new mechanism for coordinating economic activity and managing relations between individuals. Blocking opens up new opportunities for exchanging, collaborating and building communities, the emergence of which was impossible due to high costs for information and transactions.
We expect that the detachment, as a new institutional technology, will destroy and transform economic activity and social organization. Institutional cryptoeconomics is a new analytical model that studies this evolutionary process.
First of all, we note that we are confident that the approach to the transaction costs of Oliver Williamson, who won the Nobel Prize in Economics in 2009, is the ideal theoretical model for studying blockage. Williamson was primarily interested in understanding which decisions from the “make” and “buy” categories have to be made by companies.
Which is better: to acquire initial resources in the open market or to produce them independently?
This choice determined the boundaries of the company, which in turn determined the structure of incentives for decision-makers.
Williamson described human behavior as follows: “the key factor determining the boundaries of the firm is” opportunism “or” the achievement of one’s own goals by fraudulent methods. ”
The combination of opportunism and the specifics of assets (which determine how investments can be resold or redistributed for other purposes) meant that such complex economic behavior was necessary in large corporations. This state of affairs implied the need for large investments of financial capital.
Thus, we observed the dominance of shareholders’ capitalism in the nineteenth and twentieth centuries.
Blockade breaks the relationship between size, opportunism and asset specificity.
Blockade fundamentally eliminates opportunism (since it is a technology without trust) and allows the use of specific assets to small businesses that are supported by large investments not of financial but of labor capital. Thus, market incentives penetrate deeper into the structure of companies and solve the problems of collective production.
For many industries, blockade will radically change the boundaries of companies, allowing individuals to trade their talents and skills in an environment in which there are no large corporations.
Of course, the disappearance of large companies has been predicted for a long time. But now we believe that these predictions will come true in many industries or even in their majority.
The decline of capitalism of shareholders will affect the economy and the society itself. It will put new pressure on problems of employment, inequality, political power and the structure of legislative regulation. It opens a lot of great opportunities. The model of Wilhasson also helps to understand how the blockage will change and improve the provision of insurance services, public goods and the protection of personal information.
Many people say that we are witnessing the birth of a “blockade-revolution”. Institutional cryptoeconomics offers an amazing way to understand what features of the former system we will lose, and what will come to replace them.