Bitcoin 2.0 Is About Freedom
Mar 4, 2014
In 1937 Ronald Coase published a groundbreaking article: “The Nature of the Firm”. In it he posed a very simple question: “Why do firms exist?”. In his research he came up with the concept of transaction costs to explain the nature and limits of firms. Companies exist primarily because the underlying coordination mechanisms of the market aren’t perfect.
During the Industrial Revolution hierarchies became the dominant way to organize the world.
Until now it has been the most efficient way to overcome the transaction. The internet makes it possible to cut down in transaction and communication costs. By doing so, the internet introduces a new kind of firm, almost by definition. The Dentralized Autonomous Corporation represents this new nature of the firm: a company where software is in control. Hal Varian, Chief Economist of Google, calls these new firms “micro multinationals” and believes that these companies will rule the world in the coming years: “If the late 20th Century was the age of the multinational company, the early 21st will be the age of the micro multinational: small companies that operate globally.”
Bitcoin Is Capitalism 2.0
Within a few years we will see many new and different types of DACs – powered by initiatives like Invictus Innovations, Mastercoin, NXT, Ethereum – that will replace centralized commercial services such as Facebook, Twitter, Youtube, eBay, stock exchanges, Spotify, Netflix, ISP’s, Gmail, online sportsbooks, voting booths, SSL, cloud storage like Dropbox, and much more. Companies like Google, Amazon, Facebook etc. have disrupted various industries around the world. Soon it will be their turn to be disrupted by these DAC’s. “The DAC that creates the best automated model for both investors and customers in a particular market will be able to come out on top. This is capitalism in its purest form.” The Bitcoin block chain offers a platform that isn’t controlled by anyone. Everybody can participate voluntary and the system cannot be manipulated by governments, corporations, bankers etc. So no more crony capitalism.
The currency application of Bitcoin was version 1.0. The block chain is Bitcoin version 2.0. Bitcoin 2.0 is real capitalism. It enables a market with true self-regulating behavior, as Adam Smith ment with his “invisible hand”. Individuals can make profit, and maximize it without the need for government intervention. “Bitcoin 1.0 is monetarism 2.0 and Bitcoin 2.0 is capitalism 2.0”33 as Max Keiser so eloquently said in one of his reports.
A frictionless and transparent marketplace that is executed on top of the Bitcoin platform will put a lot of pressure on existing companies. They are not used to compete with automated services and DACs. Companies will have to make decisions with the speed of the internet, which is by definition impossible. These companies will “try to preserve the problem to which they where once the solution”. But the dramatic changes in business will unearth a major gap between traditional approaches to strategy and the way the real world will work. It is “the end of competitive advantage” as we know it.