One of the main goals of Blockchain technologies is to eliminate many of the typical market inefficiencies. So which are these typical market inefficiencies?
1 – High Costs of Intermediation
Traditional intermediation costs are in many cases ridiculously expensive. In order to clarify, let’s think about a couple of examples:
Stock Brokerage Fees
Bank Wires Fees
Online Payment Gateways Fees
Supply Chain Management Auditing Fees
Blockchain technologies can radically reduce the costs of intermediaries. Both private and public Blockchains can make extensive usage of smart contracts to speed-up many of these processes through automation. By translating many off-chain real world interactions to on-chain transactions, Blockchain technologies can drastically reduce the costs of intermediation.
2 – Restricted Access to Credit
There are many situations on which entrepreneurs and producers can’t get access to affordable credit. For instance, a green energy producer may require a loan from traditional credit institutions but the repayment conditions may turn the project unviable.
One of the main benefits of Blockchain technologies and smart contracts, is that it enables end-consumers to finance these projects directly without the typical intermediation costs. The typical process of crowdfunding through Blockchain technologies entails an ICO (Initial Coin Offering). On this process, companies, private investors and end-consumers get the chance to directly participate in the funding process.
3 – Geographical Limitations
There are billions of people all over the world that don’t have access to financial services. Using Blockchain technologies, governments could eliminate the historical barriers imposed by the traditional banking system and provide credit services directly to the unbanked.
4 – Asymmetric Information
Asymmetric information is one of the most typical problems in economics and it has a direct impact on our daily lives. Asymmetric information occurs when one party to a transaction has more or superior information compared to another. We know many different market situations where this happens quite often but let’s think about one of the most important asymmetries of the traditional monetary system: lack of predictability on the value of money.
Do citizens know which will be the issuance rate of the legal tender in the next 10 years? Is there any reliable mechanism to anticipate how much debt a government may acquire on any specific time frame? What about the probability of currency devaluation and its direct negative effect on purchasing power and inflation rate?
Unfortunately, the answer is a big ‘no’ to all these questions and this is exactly one of the reasons why many industry experts consider that Blockchain technologies could provide citizens with higher degrees of certainty when it comes to monetary policy. If you are interested on this particular topic, we invite you to check our post entitled “Can Smart Contracts and Blockchain Technology Generate Better Monetary Policies?”
5 – Lack of Transparency
There are many industries on which information is partial, restricted and end-users don’t have the possibility to audit. Information is provided as given without the chance to ask for explanations.
The digital advertising industry i.e., has wasted billions of dollars on fake bot-traffic according to different ANA (Association of National Advertisers) reports from 2016, 2017, etc. On this context, Blockchain technologies can considerably improve the current status of the digital advertising industry. By allowing advertisers to purchase all their ad-inventory directly through Blockchain technologies, bot fraud is mitigated. All transactions (impressions, clicks, conversions, etc.) can be tracked on a one-by-one basis including user agent, IP, click patterns and any other relevant information. All this information could be included on different Blockchains and advertisers would have the chance to directly audit their campaigns. There would be no more blindness in the ecosystem.
RSK, a revolutionary technology that allows developers to integrate their Dapps using Bitcoin’s Blockchain, can definitely help in the process of reducing the typical marketing inefficiencies that we’ve just analyzed.
RSK is the first open-source smart contract platform with a 2-way peg to Bitcoin that also rewards the Bitcoin miners via merge-mining, allowing them to actively participate in the Smart Contract revolution. RSK’s goal is to add value and functionality to the Bitcoin ecosystem by enabling smart-contracts, near instant payments and higher-scalability.
The project, which has been conceived as scalable & secure, allows developers from all over the world to integrate their dApps and take advantage of instant payments on a Bitcoin-friendly environment. If you want to learn more about RSK, please do not hesitate to contact us.