Can blockchain & "smart contracts" empower localities?
Er, blockchain? The OED defines it as "a digital ledger, in which transactions made in bitcoin or another cryptocurrency are recorded chronologically and publicly". A living expression of this might be: "we can actually have a look at the blockchain and see evidence of what's going on".
What use is this - which is what the can-do readers of The Alternative UK will ask? Vinay has written two helpful articles for the Harvard Business Review - the first an overall explanation of the blockchain, but the second makes it crystal clear what this tech makes possible: "The promise of Blockchain is a world without middlemen".
Across these pieces, and in his major thesis "The Internet of Agreements", Vinay holds out the prospect of a new world of trading relations. Buyers and sellers will be connected by "smart contracts" that are enacted by computer programming, removing the percentage commission charged by current (and often human-run) intermediaries.
Vinay thinks this will liberate local economies to trade much more efficiently with their far-flung customers as possible - and thus unleash a new, more balanced era of economic growth. (There are sceptical voices though - see Brett Scott).
Here's at least a clear vision, taken from The Internet of Agreements paper:
UNDERSTANDING GLOBALIZATION 2.0
Computers have come a very long way since the golden age of facilitating international trade by flattening local regulation. That paradigm is old and has not been challenged in many decades.
But now the technology has caught up with the challenges of representing the real world. If we correctly deploy technology to facilitate international trade, we can get a much better new equilibrium.
On one hand, local flexibility and the ability of local governments to regulate in the interests of their people. On the other hand, the ability to cheaply and effectively form international complex value networks, to liberate the productivity which is still locked up behind transaction costs and regulatory diversity.
You could think of this model as “Globalization 2.0”. The first globalization was an industrial model of globalization, where everything has to be made with the same standards before people can work together.
In Globalization 2.0 computers take the strain of handling local differences in standards, regulation and consumer preference, and advanced manufacturing meets these requirements because it can run small batches tailored to local needs efficiently.
Computers handle the red tape, and the blockchain is the next step.