Davos elites still do not understand blockchain

Davos elites still do not understand blockchain

Every year at the World Economic Forum, we have a handful of hot topics that eclips any other issues, consuming all the attention of business people, government officials, professionals, celebrities and journalists – the Davos people.
This year, like last year, Donald Trump was the main subject in Davos. But that was to be expected.

Remarkably, at least for those interested in blockchain technology since it came out of obscurity (that is, about two years ago), the blockchain was a uber-theme at this year’s event.

After the massive increase in the price of bitcoin and other things at the end of last year, and after the press covered the “crypto explosion,” everyone wanted to find out why so many waves are happening.

Those curious were able to dig deeper into the subject at the various blockchains displayed outside the secured perimeter of the conference by several groups like Consensys and the Global Business Blockchain.
At these presentation stands, those interested could ask for information on how technology works and can understand what decentralized distribution record technology and confidence without intermediaries promises. It has implications in all areas, from payments, international development and financial markets to Internet of Things, energy, environmental management and identity.

But some have not dropped the chart and there are strong signs that for the participants in the World Economic Forum at Ddavos, these concepts are still far from mass acceptance by politicians.

They have minimized the relevance of technology and have put emphasis on risks. It is clear that those who believe in technology still have work to convince the most influential people in the world to get out of their comfort zone.

Krugman’s myopia

In an interview he gave in Davos, British Prime Minister Theresa May said he was studying very seriously crippled actions, “especially because of the way they are used, especially by criminals.” In South Korea, the same week, the government announced new rules that require traders to reveal their identity.

However, Paul Krugman, one of the Nobel laureate-winning economists, has come to the fore. He was very critical of cryptomonas and blockchain technology, much like Joseph Stiglitz and Robert Shiller.

Krugman responded to an article in New York Times, where he said that blockchain technology can be summed up in one conclusion:

The bitcoin market is very vulnerable to manipulation by unknown players. One of these players might be the government of North Korea.

Blockchain is exciting, but it’s still not clear if it’s useful. Bitcoin investments seem even less reasonable than those in cold fusion.

Predictably, the crypto community did not take seriously the economist, whom he considers an “ignorant dinosaur.” The fans were very excited to remember why he said in 1998 when he predicted that “The impact of the Internet on the economy will not be greater than that of the fax machines.
Let’s fix one thing. Paul Krugman is not stupid. Let’s face the attacks on the person. I think it is more constructive to see the grounded thinking of an otherwise intelligent mainstream economist who makes people like him misunderstand the new social structures created by open-source communities, distributive consensus models and motivation systems tokenize.

Krugman and his cohort are stuck in a rigid way to see the world. They have remained in a fraternity economy despite the 2008 crisis that has revealed major flaws in “rational” patterns of human behavior.

When it comes to understanding the value proposition of blockchain technology and the conclusion that “they are not useful at all”, the biggest problem is that it fails to recognize the price we pay for trust.

The hidden costs of trust

First of all, Krugman is right when he says mining is expensive and the need to keep multiple copies of the distributive trades register is “boring” and “costly.” One answer is that innovations like Lightning Network can solve the problem. But a better answer would be “compared to what?”

“What’s” in our case is defined by the implicit and explicit costs that organizations pay to resolve trusted issues. It seems that trust is costing and the bill is cut to consumers through higher prices and restricted access. It’s really expensive.

It’s hard to give a precise figure. It’s enough to think about skyscrapers in the world and all financial institutions, all full of accountants who do audits and checks on company invoices, purchase orders, and financial reports.

Everyone tries to reconcile their centralized separate registers, and that’s because they do not trust the registers of others. That’s the cost of trust.
The cost of trust can also be conceived by the old adage about the current – the highest current price is at the current you can not access. There are all sorts of transactions that can enrich you and that we can not do because we can not solve the problem of trust.

For example, we can not make peer-to-peer microtransactions between Internet of Things devices without passing through an intermediary institution. It can be a bank or a cloud service like Goodle or Amazon. This not only adds to costs and friction, but constrains innovation.

If you come out of the developed world bubble, it also takes into account the financial exclusion of the third world countries. The cost of the two billion people without bank accounts is really great. Here is Krugman really miop. He can not get out of the bubble of the developed world. He claims that the only reason you might want to do electronic cryptocurrency transactions is “to buy drugs, order assassinations, and so on.”

The perfect moment?

But the developed world is not immune to the problems of trust.

The results of the public relations firm Edelman in the “Barometer of Trust,” made public at the World Economic Forum by Davos, were frightening, at least for Americans.

This annual survey showed that US confidence dropped 9 points among the population. It’s the biggest drop in confidence. The decrease was 23 points among the so-called “informed public”. It is the lowest level in all 28 countries that have been studied. Under Russia and South Africa.

What this means? Let’s look at Breitbart, which for many liberal Americans is responsible for this rupture.

Richard D. Edelman, director of PR, said that the main factor behind the decline in confidence is that “we lack common data and we have fundamental differences in their interpretation.

Common data needs a common register of truth. We know a technology that could help here.

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