By Santiago Rivera
A very interesting article, written by students from the University of Toronto and the Massachusetts Institute of Technology (MIT), highlights the cost benefits Blockchain technology can offer.
Publication data: “Some Simple Economics of the Blockchain”
Christian Catalini (MIT) and Joshua S. Gans (University of Toronto) * September 21, 2017
If you like a copy, please request it in the comments.
The costs analyzed by Catalini and Gans are those of validation and the creation of a network.
The authors propose that the cost of validation of any digital transaction can be reduced using Blockchain technology. This presents great benefits, among others, in terms of verification of transactions, since Blockchain provides the bases of the technological infrastructure so that verifications or validations are made through the technology itself-instead of reconciling in the traditional way through investing authority to a third party.
The Blockchain technology began as the technological base for the creation of Bitcoin in 2008. Since then, this new technology has been implemented in the creation of new technological applications that use the benefits of said technology to solve various real-life problems.
An example is Ethereum, which also has its cryptocurrency, Ether. In general, what is stored in Ethereum are “digital goods” for computing power and applications. With Ethereum, parts of code can be stored in a decentralized and encrypted manner with the benefits that this entails. This makes perfect sense; I can not think of a better way to store a complex digital asset (as any code is) than under Blockchain’s technological infrastructure. I am here to make a comparison with a couple of alternatives, a very ridiculous one and another that could already be thanks to advances in technology. The first would be to print lines of code on a paper and the second to save it on a USB to register that code physically in some copyright file.
Even storing an entire code within a single centralized database would seem to me a high-risk activity in 2019-taking into account the reality of cyber risk today. Which suggests that one of the great benefits of Blockchain technology is decentralization in the database.
All of the above creates the possibility of generating consensus networks supported with Blockchain technology. If a group of people, traders or economic / legal agents of any kind decide to act under the protection of a technological consensus such as Blockchain, then incentives can be generated aligned to a conceptual framework of game theory so as not to break this consensus-so penalty of suffering the legal consequences with greater certainty than under any other type of consensus not supported by technology (for example, a signed paper reviewed and filed by a public server that controls said file).
In a very accurate way, the authors of the article mention the need for a “credible” link between reality (offline) and what is recorded online (online). The benefits in both validation and network generation costs are subject to the credibility of the offline reality link and the online registration. Therefore, any technological product that is designed to take advantage of the benefits of the Blockchain technology must cover this requirement very well.
At WeeSign, we are creating the technology that will allow you to electronically sign any document and “upload” that consensus to Blockchain. In a very simple way you can generate legal consensus on any piece of information in .pdf and .doc format. Our technology is aligned with the necessary Blockchain technical requirements to generate consensus networks and thus reduce various types of costs in your operation.