I’m not alone. Across the world, there is a question of trust.
Assets disappear, currencies devalue, properties ceased, tax laws changed. Even safe-haven bank deposits can be unilaterally gouged by negative interest rates. My financial future is being controlled by political forces which I object to.
And there is a lot that I object to… the collusion in big pharma and big banking. Libor rates are rigged, funds are embezzled, collusion, fraud, unethical practices abound. Across so many industries it is the same story: big gone bad.
But why does ‘big’ become ‘bad’? One reason is it is hard to follow the money. In most industries the maze of rebates, kickbacks, subsidies and transfer pricing, confounds the transparency needed for proper oversight.
These kickbacks, prevalent in every industry, are symptoms of a deeper structural problem:Layers of intermediaries and aggregators have clouded the visibility needed to detect and fix problems.
Antiquated workflow processes, put in place by ‘appointed’ middle men, the ‘permissioned’ middle, create hidden relationships and hidden agreements. Once in place, unintended collusion calcifies the industry, stalls innovation and invites theft.
Discrete providers in a supply chain are held to competitive pricing. But distortions happen with proprietary access and back-office deals that align the interests of a few, while erecting long-term barriers for all. Especially in fast-changing technology landscapes, intermediaries often offer fleeting value but capture perpetual rent from hidden agreements which are not held to competitive pressures.
Take for example one of the largest, most liquid markets in world, the U.S. Stock Market. It’s a fully digital market, yet every time I purchase a share of stock, more than five intermediaries are part of the transaction*. Why? What do they each charge? Think of the possibilities for misappropriation at each step. Think about the inefficiencies. Hell, it’s a fully digital market.
Then, to patrol the maze of digital participants, we have appointed regulatory agencies like the SEC, FINRA, CFTC and many others. These regulators don’t directly touch the transaction, but extract fees and determine how it is handled, and by whom. They also keep records in formats not widely supported by contemporary data query models, obfuscating linkages between asset classes, geographies and regulatory boundaries.
And because of where intermediaries sit, they are quite powerful. Their ethics are tested every day.
Middlemen have information advantage, knowing both sides of the transaction. They control access, they set artificial boundaries, they can dictate price. In financial services, some intermediaries can re-use our assets without remuneration, generating free float. And, as we see with Facebook, middlemen can use our behaviors against our own self-interest.
But, if we could collapse the middlemen, make transparent the transactions, eliminate information asymmetry, there could be a fix to the mess we are in.
Bitcoin eliminates the middlemen. Using technology to drive consensus and vet transactions, the distributed, open access paradigm of bitcoin allows for everyone to participate. There are no appointed middlemen to restrict entrance or to dictate the terms of membership. The blockchain consensus algorithms, transparent to everyone, manages the ‘rules’ of the marketplace.
To me, bitcoin, is more than a digital currency, it is an economic platform for people around the world. People, just like me,who are fearful of the “un-elected third parties” that control our financial well-being.
Compared to today’s market structures, both bitcoin and blockchain-inspired markets look clean, accessible and efficient. In this way, bitcoin, and blockchain-based marketplaces, give me faith in the future.
© May 2018, Marie Giangrande
I began working in the blockchain space in 2015 and have helped startups find early traction, build a pipeline of demand and cultivate public, investor, and regulatory communities.
*1) If the trade is internalized only one party may be involved. In other circumstances, there may be hundreds who touch the transaction.