Institutional Encryption Economics: New Era, New Model


nnIn this review, Chris Berg, Sinclair Davidson, and Jason Potts, researchers at the RMIT Blockchain Innovation Hub at the Royal Melbourne Institute of Technology (RMIT), have suggested that block chains may be more than a few hundred In the middle of the year, the so-called “generic technology” of the whole society was more disruptive. At the same time, the three authors said in the text, there is no doubt that the block chain is a general technology, but its meaning is more extensive than this. More specifically, the block chain opens up new opportunities for communication, cooperation, and community building that can not be achieved due to higher information costs and transaction costs.n
nTranslation: Clovern
Chris Berg, Sinclair Davidson and Jason Potts are researchers at the RMIT Blockchain Innovation Hub at the RMIT’s Melbourne Institute of Technology in Melbourne, Australia.n
In this review, the author explores that block chains may be more subversive than the so-called “generic technology” that transforms society as a whole over the last few hundred years.n
Although cryptographic economics has become an active research field, the study of block chains can not be confined to computer scientists and game theorists.n
The introduction of block chain technology poses complex problems in the fields of economics, public policy, law, sociology and political economy. And what we call “institutional economics” begins with a very simple premise – the block chain is not just a new generic technique, but a new institutional technique.n
This distinction may sound a bit too much to the details, but there is a huge difference between the two concepts. General technology can help us to work better, faster, and at a lower cost. Economists understand common technologies such as steam power or semiconductors as a huge engine for economic growth.n
There is no doubt that the block chain is a common technology, but its meaning is more extensive than this.n
Rather, block chains are new mechanisms for coordinating economic activity and promoting cooperation among individuals. This has opened up new opportunities for communication, cooperation and community building that can not be achieved due to the high cost of information and transaction costs.n
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Old thinkingn
As a new institutional technology, we expect block chains to subvert economic activity and social organization and bring about transition. And institutional encryption economics is a new analytical framework for the evolution of evolution.n
First, we believe that the transaction cost approach of Oliver Williamson (who won the Nobel Prize in Economics in 2009) is the ideal theoretical framework for understanding block-chain technology. Williamson’s most interesting area is to understand the “make” or “buy” decisions that an enterprise must address.n
Is it better to buy input information in the open market or within the organization?n
This choice defines the limitations of the firm, thus determining the incentive mechanism faced by the decision maker.n
As described by Williamson as described in Human Behavior, the key determinant of corporate limitations is whether the firm is “opportunistic” or “fraudulent pursuit of self-interest.”n
The combination of opportunism and asset specificity (meaning that investment can be easily resold or otherwise used) means that complex economic behavior must occur in large companies. This in turn means the need for substantial financial capital investment.n
Therefore, we see that shareholder capitalism dominates in the 19th and 20th centuries.n
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New paradigmn
And the chain of chains to break the scale, opportunism and asset-specific relationship between this.n
By significantly eliminating opportunism (that is, as a “no-trust” technology), block chains enable the deployment of specific assets in small businesses – small businesses that are not supported by large amounts of financial capital but with large human capital support The This allows market incentives to penetrate deeper into a solid structure that addresses team production problems.n
For many industries, the block-chain technology will completely redefine the boundaries of the company, so that individuals in the absence of large enterprises to participate in the environment to trade their own skills and skills.n
Of course, the overshadowing of large listed companies has been predicted before, but this time we believe that these forecasts will bring the final result to many industries, if not most.n
The decline of shareholder capitalism will have an impact on the economy as a whole and society itself. This will put new pressures on employment, inequality, political power and regulatory countries. At the same time, it also opens up a huge new opportunity. The Williamson framework can also help us understand the block chain change and enhance the provision of insurance, the provision of public goods, and the way in which the identity is protected and provided.n
People often say that we are in the beginning of a “block chain revolution”. Institutional Encryption Economics provides us with an exciting way to understand what features we are about to lose and what new features will be replaced.n

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