Various characteristics of blockchain technology such as immutability and the creation of a "shared truth" might have substantial implications on the economy by dramatically changing transaction costs. In a recent study, Davidson, Novak and Potts estimate that the cost of trust accounts for 35% of (U.S.) employment.
Article The Cost of Trust: A Pilot Study
If blockchain technology can be used to reduce those costs, the structure of the economy might change considerably. What do you think?
Paul: The use of cryptocurrency in the supply chain may have the following effects on the economy:
1. Eliminating the need for middlemen in financial transactions
2. Separating transactions from the dollar
3. Removing barriers to entry
4. Complicating regulation
5. Enabling more international transactions
6. May make monetary policy more difficult
Thank you for your interesting comments so far. I am mostly interested in the broad implications. Paul mentioned the separation from the dollar, less barriers but more complicated regulations etc. Where will this lead us? Will governments or central banks try to stay in control of the monetary system or will an international monetary system emerge that is independent of individual nations?
Blockchain can have to huge impact on economics and Satoshi was wanted to reduce minopolis of banks. Although blockchain has very positive impact for decentralization but it also results in some new problems like in past some drug and weapon dealings were made using blockchain based marketplace. So banks and Govts will use such issues to keep control on economics by centralization of banks.
Dealing with illegal drugs and weapons includes (at least) three stages: production, distribution and payment. Cryptocurrencies can only facilitate payment. It is true that this is an unfortunate aspect but illegal markets have existed long before crypotcurrencies and will continue to do so even if they would be fully regulated. It is just the case the governments, central banks and many major intermediaries have a vested interest in highlighting just the negative aspects since they feel threatened.
Muhammad Awais ,Horst Treiblmaier That is the side effects.
For the impact on the economy, cryptocurrencies will help the economy due to low-cost transaction fees, faster transactions and wide availability.
Quan Hoang Nguyen Yes, those are side effects. Interestingly, several governments now consider the introduction of "official" cryptocurrencies. These will be the opposite of decentralized and pseudonymous.
Horst Treiblmaier That's due to the benefits of cryptocurrencies.
Businesses that used to serve as gatekeepers and "vetters" will suffer the most. Trust disintermediation will "unglue" a lot on existing contracts and businesses that have come up with ways to cement trustful partnerships through innovative mechanisms:
Article Digital Transformation and Trust (Dis)intermediation – Colem...
Case-in-point: auction houses (in particular the art world) that used to pride themselves in expert judgement and built their business reputation on a legacy of trust are beginning to feel the heat:
https://thenextweb.com/hardfork/2019/03/22/art-auction-records-blockchain/
Does it pay to come clear and be frank and truthful?
Article Functional Interdependence Theory: An Evolutionary Account o...