Let’s say a new technology is developed that might 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 are able to trust one another? They would have to verify their agreement with third parties – banks, legal teams, government registration and so on. This brings them back to square one in terms of utilising the technology to save costs.
In the next stage, the third parties are now invited to join the actual estate deal and provide their input while the transaction will be blockchain created in real time. This reduces the role of the middleman significantly. If the deal is this transparent, the middleman could even be eliminated in some cases. The lawyers are there to prevent miscommunication and lawsuits. If the terms are disclosed upfront, these risks are greatly reduced. If the financing arrangements are secured upfront, it will undoubtedly be known beforehand that the deal will undoubtedly be covered 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 now been completed, how will the deal be covered? The system of measure would be a currency issued by a main bank, meaning 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 would imply costs and delays. Could be the technology that useful in creating efficiency up up to now? It is not likely.
What’s the clear answer? Create a digital currency that’s not only as transparent as the deal itself, but is certainly the main terms of the deal. If this currency is interchangeable with currencies issued by central banks, the only real requirement remaining would be to convert the digital currency right into a well-known currency like the Canadian dollar or the U.S. dollar which may be done at any time.
The technology being alluded to in the example may be the blockchain technology. Trade may be the backbone of the economy. A vital reason why money exists is for the purpose of trade. Trade is really a large percentage of activity, production and taxes for various regions. Any savings of this type that can be applied across the world will be very significant. For instance, look at the concept of free trade. Prior to free trade, countries would import and export with other countries, but they had a tax system that will tax imports to restrict the consequence that foreign goods had on the neighborhood country. After free trade, these taxes were eliminated and a lot more goods were produced. Even a small change in trade rules had a big effect on the world’s commerce. The word trade may 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.