Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Blockchain Archipelago - Rob Knight, Refactor Camp 2018

350 views

Published on

Talk given at Refactor Camp, May 2018

Published in: Economy & Finance
  • Be the first to comment

  • Be the first to like this

Blockchain Archipelago - Rob Knight, Refactor Camp 2018

  1. 1. Blockchain Archipelagos A possible future
  2. 2. What is a blockchain? A global, distributed database that has: ● Immutable history ● Digital signatures built in ● Fair solution to consensus, for some definition of “fair” ● Smart contracts, or at least some programmability ● Probably Merkle trees?
  3. 3. The Internet of Agreements ■ Internet of Ideas - HTTP, SMTP, FTP, HTML Simple information sharing: pages, documents, emails, wikis, blogs ■ Internet of Shopping - HTTPS, SSL, PCI/DSS Point-to-point payments: Amazon, Netflix, eBay ■ Internet of Agreements - blockchains, AI, automated logistics Multi-party, conditional, long-term agreements
  4. 4. Coase and smart contracts
  5. 5. Coase’s Theory of the Firm ● Why do firms exist at all? Why use hierarchy and command rather than contracts? ● Firms are more like feudal aristocracies than markets Coase tells us that transaction costs make top-down firms more efficient than contracting out in some scenarios. Breaking up integrated firms creates new markets, but also creates new transaction costs.
  6. 6. Intents and disputes In a firm, shared intent is formed top-down. The top of the hierarchy gives orders, the lower levels implement them (or pretend to). Disputes are a disciplinary matter. In a (fair) market, shared intent is formed using contracts, which both parties must find acceptable. Disputes are handled by neutral procedures, with third parties employed to mediate and arbitrate.
  7. 7. Marketisation is hard Constellations of market relations can be really hard to manage - so-called “Coasean hells”: ● The F-35 ● British railway networks ● The US healthcare system ● Modern universities ● Arguably, the Global Financial Crisis Often, out-sourcing and sub-contracting performs worse than we might expect.
  8. 8. Smart contracts might shift the Coasean boundary What is the problem we wish to solve when we try to construct a rational economic order? [...] it is a problem of the utilization of knowledge which is not given to anyone in its totality. - Friedrich Hayek, The Use of Knowledge in Society, 1945 Put simply, smart contracts digitize relationships in the market. This can reduce transaction costs and increase information flow. Vinay Gupta’s “Dog Atheism” is one example of how a smart contract economy could employ complex value transfer using smart contracts.
  9. 9. Globalization and its challenges
  10. 10. Image from http://rodrik.typepad.com/dani_rodriks_weblog/2016/06/brexit-and-the-globalization-trilemma.html Dani Rodrik’s trilemma of the world economy. Nation states, democracy, integrated markets - pick two!
  11. 11. If rules between nations vary, the costs of compliance disrupt trade. So, either eliminate the nations (EU) or eliminate the variation (WTO). Result: large, homogenous blocks, reduced local variety. The way things are: globalization 1970-2016 Credit: Kari, deruneinholbare, Chalky Lives (Flickr)
  12. 12. Globalization’s assumptions are breaking down ● TPP failed to achieve ratification ● NAFTA is back on the table ● Brexit ● Right-wing populism and nationalism on the rise ● The China Shock was real In many cases, nation states and self-determination are being chosen ahead of further market integration.
  13. 13. Globalization 2.0 Some boundaries are fine. In fact, they’re good! Variation is not just tolerable, it should be encouraged. That leaves us with an integration problem that is practical, not philosophical. Put simply: how do we handle the paperwork?
  14. 14. How the blockchain saves the world economy ● Smart contracts can solve their own compliance problems ● Open, digital representations of deals and trade networks give us “God’s- eye-view” of systems we previously controlled using crude regulations ● Measurements of network health and other emergent outcomes are possible ● Smart contracts lower the cost of running a trading economy
  15. 15. Image from http://rodrik.typepad.com/dani_rodriks_weblog/2016/06/brexit-and-the-globalization-trilemma.html Put generically, we have separation, self-determination, and integration. Integrating separate, self-determining units is hard, but not impossible. We need the right shared intents, and the right dispute resolution.
  16. 16. Generated with https://azgaar.github.io/Fantasy-Map-Generator/
  17. 17. This is one possible future Decentralized groups, integrated by common means of contracting and dispute resolution. Applies to firms, nations, social media communities, and more. But it’s not the only option! Others include more restrictive nationalisms, balkanized internet, or global monoculture.
  18. 18. Our scenario planning pack
  19. 19. Q&A @rob_knight

×