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Is blockchain the end of the firm? (Or, why are there firms rather than nothing?)

  1. Sep 20, 2016 #1

    EnumaElish

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    Blockchain is much touted to be the next coolest idea happening right now: https://www.weforum.org/agenda/2016/06/the-blockchain

    The idea seems to be lower transaction (e.g. contracting) costs. Which are huge. (Between 5-10% of total project cost according to a world bank estimate.) So blockchain's use for multilateral contracts is a radical innovation.

    A corollary is, firms (e.g. corporations, but also nonprofits) are no longer needed. Put simply, an economic firm is a mechanism to minimize transaction costs. You could say "the extent of firm is determined by the level of transaction costs" and it would be an apt summary.

    http://www.economist.com/node/17730360

    Also see http://www.sjsu.edu/faculty/watkins/coase.htm among others.

    OTOH, remember bitcoin?

    https://en.m.wikipedia.org/wiki/Bitcoin

    Thoughts?
     
    Last edited: Sep 20, 2016
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  3. Sep 20, 2016 #2

    Bystander

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    Enforcement?
     
  4. Sep 20, 2016 #3

    EnumaElish

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    Courts? Arbitration?
     
  5. Sep 20, 2016 #4

    EnumaElish

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    Firms include nonprofits like schools. In a multilateral contracting economy, parents could multilaterally contract with instructors to teach children, and the instructors could multilaterally contract with "classroom rentals." Every semester. Or every 5 years. And no one would need a "school." Public schools may be preserved for basic education, but afterwards it would all be multilateral contracts between parents, instructors, and real estate owners.
     
    Last edited: Sep 20, 2016
  6. Sep 20, 2016 #5

    Vanadium 50

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    I thought that Bitcoin forked because it couldn't keep up with the transaction rate.
     
  7. Sep 20, 2016 #6

    EnumaElish

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    http://www.wired.co.uk/article/large-bitcoin-exchanges-attacks
     
  8. Sep 20, 2016 #7

    russ_watters

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    I can't see keeping my money on a flash drive nor the basic idea of anarchy as being appealing to me. Such ideas will always be counterculture stalwarts and never adopted by the rest of us.
     
  9. Sep 20, 2016 #8

    Vanadium 50

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    A lot of the people who were in favor of anarchy changed their minds after Mt. Gox failed - then there were loud calls for government intervention.
     
  10. Sep 20, 2016 #9

    russ_watters

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    And even then, the idea of an institution to hold your money and conduct transactions for you doesn't sound very anarchistic to me. Sounds a lot like...a bank. Except without interest, insurance, related services, customer service or oversight. Yeah, sounds awesome! :rolleyes: Take that, Mr. Man!
     
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