Let’s say a new technology is developed that can allow many parties to transact a real-estate deal. The parties get together and complete the important points about timing, special circumstances and financing. How will these parties know they could trust each other? They will have to verify their agreement with third parties – banks, legal teams, government registration and so on. This brings them back again to square one with regards to utilising the technology to save lots of costs.
In the next stage, the 3rd parties are actually invited to participate the real estate deal and provide their input as the transaction is being blockchain created in real time. This reduces the role of the middleman significantly. If the deal is this transparent, the middleman can also be eliminated in certain cases. The lawyers is there to stop miscommunication and lawsuits. If the terms are disclosed upfront, these risks are greatly reduced. If the financing arrangements are secured upfront, it will be known in advance that the deal will be paid for and the parties will honour their payments. This brings us to the past stage of the example. If the terms of the deal and the arrangements have already been completed, how will the deal be paid for? The unit of measure would be a currency issued by a main bank, which means dealing with the banks once again. Should this happen, the banks wouldn’t allow these deals to be completed without some type of due diligence on the end and this might imply costs and delays. Could be the technology that useful in creating efficiency up to this point? It is not likely.
What’s the clear answer? Develop a digital currency that’s not only as transparent as the deal itself, but is actually area of the terms of the deal. If this currency is interchangeable with currencies issued by central banks, the only requirement remaining would be to convert the digital currency in to a well-known currency just like the Canadian dollar or the U.S. dollar which may be done at any time.
The technology being alluded to in the example could be the blockchain technology. Trade could be the backbone of the economy. An integral reason money exists is for the goal of trade. Trade takes its large percentage of activity, production and taxes for various regions. Any savings in this region which can be applied across the entire world will be very significant. For instance, consider the notion of free trade. Just before free trade, countries would import and export with other countries, but they’d a tax system that could tax imports to restrict the consequence that foreign goods had on the local country. After free trade, these taxes were eliminated and a lot more goods were produced. Even a small change in trade rules had a large impact on the world’s commerce. The phrase trade could be broken on to more specific areas like shipping, real-estate, import/export and infrastructure and it is more obvious how lucrative the blockchain is if it may save even a small percentage of costs in these areas.