For example, a new technology has been developed that can allow many parties to enter into a real estate transaction. The parties come together and supplement details on deadlines, special circumstances and funding. How do these parties learn that they can trust each other? They would have to check their agreement with third parties – banks, legal teams, state registration and so on. This brings them to the forefront in terms of using technology to save costs.
In the next step, third parties are invited to join the real estate transaction and contribute while the transaction is created in real time. This greatly reduces the role of the mediator. If the transaction is so transparent, the intermediary in some cases may even be liquidated. Lawyers are there to prevent unsolicited communication and lawsuits. If conditions are disclosed in advance, these risks are greatly reduced. If financing arrangements are secured in advance, it will be known in advance that the transaction will be paid for and the parties will make their payments. This brings us to the last stage of the example. If the terms of the transaction and the arrangement have been completed, how will the transaction be paid for? The unit of measurement will be the currency issued by the central bank, which means regular communication with banks. If this happens, banks will not allow these transactions to be made without some due diligence on their part, and this will mean costs and delays. Is the technology useful for creating efficiency so far? This is unlikely.
What is the solution? Create a digital currency that is not only as transparent as the transaction itself, but is actually part of the terms of the transaction. If this currency is interchangeable with currencies issued by central banks, the only requirement remains to convert the digital currency into a known currency, such as the Canadian dollar or the US dollar, which can be done at any time.
The technology mentioned in the example is blockchain technology. Trade is the basis of the economy. The main reason money exists is to trade. Trade accounts for a large percentage of activity, production and taxes in different regions. Any savings in this area that could be used worldwide would be very significant. As an example, look at the idea of free trade. Prior to free trade, countries imported and exported with other countries, but they had a tax system that taxed imports to limit the impact of foreign goods on the local country. After free trade these taxes were abolished and much more goods were produced. Even a small change in trade rules has had a big impact on world trade. The word “trade” can be broken down into more specific areas such as shipping, real estate, import / export and infrastructure, and more clearly how profitable a blockchain is if it can save even a small percentage of costs in those areas.