Let’s say a new technology is developed that may allow many parties to transact a real-estate deal. The parties gather and complete the facts about timing, special circumstances and financing. How will these parties know they can trust one another? They will have to verify their agreement with third parties – banks, legal teams, government registration and so on. This brings them back once again to square one in terms of utilising the technology to save costs.
Within the next stage, the third parties are now invited to join the true estate deal and provide their input whilst the transaction has been blockchain created in real time. This reduces the role of the middleman significantly. If the offer is this transparent, the middleman can even be eliminated in a few cases. The lawyers is there to avoid miscommunication and lawsuits. If the terms are disclosed upfront, these risks are greatly reduced. If the financing arrangements are secured upfront, it will soon be known ahead of time that the offer will soon be covered and the parties will honour their payments. This brings us to the last stage of the example. If the terms of the offer and the arrangements have already been completed, how will the offer be covered? The system of measure will be a currency issued by a main bank, which means coping with the banks once again. Should this happen, the banks wouldn’t allow these deals to be completed without some kind of due diligence on their end and this will imply costs and delays. Is the technology that useful in creating efficiency up until now? It’s not likely.
What is the clear answer? Develop a digital currency that’s not only just as transparent as the offer itself, but is actually part of the terms of the deal. If this currency is interchangeable with currencies issued by central banks, the only real requirement remaining is always to convert the digital currency right into a well-known currency such as the Canadian dollar or the U.S. dollar which can be done at any time.
The technology being alluded to in the example is the blockchain technology. Trade is the backbone of the economy. A key reasons why money exists is for the objective of trade. Trade takes its large percentage of activity, production and taxes for various regions. Any savings of this type that may be applied across the entire world could be very significant. As an example, look at the idea of free trade. Just before free trade, countries would import and export with other countries, but they had a tax system that would 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 influence on the world’s commerce. The word trade can be broken into more specific areas like shipping, real-estate, import/export and infrastructure and it’s more obvious how lucrative the blockchain is if it can save even a small percentage of costs in these areas.