Let’s say that a new technology is developed that might allow many parties to transact a real-estate deal. The parties gather and complete the details about timing, special circumstances and financing. How will these parties know they could trust each other? They would 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 with regards to utilizing the technology to save costs.
Within the next stage, the next parties are now invited to participate the true estate deal and provide their input while the transaction has been 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 a few cases. The lawyers exist 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 ahead of time that the deal will be taken care of and the parties will honour their payments. This brings us to the final stage of the example. If the terms of the deal and the arrangements have now been completed, how will the deal be taken care of? The system of measure will be a currency issued by a central bank, this 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 the end and this may imply costs and delays. Is the technology that useful in creating efficiency up up to now? It’s not likely.
What is the perfect solution is? Create a digital currency that’s not only just as transparent as the deal itself, but is actually part of the terms of the deal. If this currency is interchangeable with currencies issued by central banks, the sole requirement remaining would be to convert the digital currency right into a well-known currency such as 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. A key reason money exists is for the purpose of trade. Trade is really a large percentage of activity, production and taxes for various regions. Any savings in this region that may be applied across the planet could be very significant. For instance, look at the idea of free trade. Ahead of free trade, countries would import and export with other countries, but they’d a tax system that will tax imports to restrict the consequence that foreign goods had on the area country. After free trade, these taxes were eliminated and a lot more goods were produced. Even a tiny change in trade rules had a large effect on the world’s commerce. The word trade may 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 tiny percentage of costs in these areas.