Let’s say that the new technology is developed that may allow many parties to transact a real estate deal. The parties gather 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 with regards to utilizing the technology to truly save costs.
In the next stage, the next parties are now invited to participate the true estate deal and provide their input while the transaction has been blockchain created in real time. This reduces the role of the middleman significantly. If the deal is this transparent, the middleman can also be eliminated in certain cases. The lawyers is there to stop 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 beforehand that the deal will soon be covered and the parties will honour their payments. This brings us to the final stage of the example. If the terms of the deal and the arrangements have now been completed, how will the deal be covered? The unit of measure will be a currency issued by a main bank, which means working with the banks once again. Should this happen, the banks would not allow these deals to be completed without some type of due diligence on their end and this might imply costs and delays. Could be the technology that useful in creating efficiency up to this point? It’s not likely.
What’s the solution? Develop a digital currency that is not only just as transparent as the deal itself, but is certainly part of the 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 in to a well-known currency such as the Canadian dollar or the U.S. dollar which may be done at any time.
The technology being alluded to in the example could be the blockchain technology. Trade could be the backbone of the economy. A key reason why money exists is for the purpose of trade. Trade takes its large percentage of activity, production and taxes for various regions. Any savings of this type which can be applied across the entire world could be very significant. For example, go through the concept of free trade. Ahead of free trade, countries would import and export with other countries, but they’d a tax system that would tax imports to restrict the effect that foreign goods had on the local country. After free trade, these taxes were eliminated and many more goods were produced. Even a small change in trade rules had a big 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.