Let’s say a new technology is developed that could allow many parties to transact a real estate deal. The parties get together and complete the facts about timing, special circumstances and financing. How will these parties know they can 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 using the technology to save lots of costs.
Next stage, the next parties are now invited to become listed on the real 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 a few cases. The lawyers is there to avoid miscommunication and lawsuits. If the terms are disclosed upfront, these risks are greatly reduced. If the financing arrangements are secured upfront, it will soon be known in advance that the deal will soon be paid for and the parties will honour their payments. This brings us to the last stage of the example. If the terms of the deal and the arrangements have already been completed, how will the deal be paid for? The unit of measure would have been a currency issued by a main bank, meaning working 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 might imply costs and delays. May be the technology that useful in creating efficiency up up to now? It’s not likely.
What’s the perfect solution is? Develop a digital currency that’s not only just as transparent as the deal itself, but is actually the main terms of the deal. If this currency is interchangeable with currencies issued by central banks, the only real requirement remaining is to convert the digital currency into a well-known currency like the Canadian dollar or the U.S. dollar which can be done at any time.
The technology being alluded to in the example is the blockchain technology. Trade is the backbone of the economy. A vital reason why money exists is for the purpose of trade. Trade constitutes a large percentage of activity, production and taxes for various regions. Any savings in this area that can be applied across the entire world will be very significant. For instance, go through the idea of free trade. Just before free trade, countries would import and export with other countries, but they had a tax system that could tax imports to restrict the result that foreign goods had on the area country. After free trade, these taxes were eliminated and a lot more goods were produced. Even a small change in trade rules had a sizable impact on the world’s commerce. The term trade can be broken down 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 small percentage of costs in these areas.