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Excellent! They do not move the physical gold - they move the ownership of a digital token tied to gold, at a far lesser fee than current digital escrow. This

by arbol 9y ago

Excellent! They do not move the physical gold - they move the ownership of a digital token tied to gold, at a far lesser fee than current digital escrow. This is the same as ETF gold currently. Not many people receive actual, physical gold. In the case that you needed to receive the physical gold, the cost of trusting a delivery person remains fairly constant (until we have autonomous delivery robots). However, the proof of ownership can no longer be tampered with, as it exists on a global ledger. This reduces the overall transaction fee. The transaction is a transfer of value. Amazon and eBay are also facilitators of value transactions. The same economic rules apply albeit on a much smaller scale. Extrapolate this and any transaction of a digital asset can benefit from reduced mediator fees. The scale of this is quite large. I think this is well summarised here: https://www.ibm.com/blogs/insights-on-business/retail/transactions-trust-value-blockchain-technology/ https://www.ibm.com/blogs/insights-on-business/retail/transa... Text between asterisks is added by me. "Consensus: Thanks to the value that smart contracts and shared ledgers offer blockchain users, consensus can be more easily agreed upon and confidently understood. Using blockchain, users can make decisions based on factual data – helping to eliminate disputes, confusion and time (reduced mediator fees). Consensus is built at each step of the supply chain not just at the beginning, when the order is placed and the end, when the order is received. This process enables all parties to resolve issues as they occur and have visibility to take alternative actions if necessary. From a supply chain perspective, this adds tremendous value to merchants, logistic companies, vendors and all others working together to deliver timely, efficient inventory deliveries, re-orders and more. This is particularly important when you factor in that data – and data alone – is what leads supply chain leaders in their immediate and future decisions. Without concrete data to refer to and analyze, decisions cannot be as precisely made between both internal and external partners alike." TLDR: reduced mediator fees reduce barriers to entry in any market where value transactions occur.

lucozade 9y ago
> They do not move the physical gold If you're not moving the gold, who needs escrow? You're just describing a cash settled spot market. > the cost of trusting a delivery person remains fairly constant Indeed, as you're having no effect on either escrow or post-settlement delivery. But that's my point, smart contracts don't make a blind bit of difference. > Amazon and eBay are also facilitators of value transactions The value is in the goods turning up. Smart contracts don't help at all outside digital assets. Or more specifically, the payment process is trivial compared to the logistics process. The value is almost all in the latter. That's not generally true for digital assets. But today, the main challenges with those are to do with rights and marketing/discovery. Again, that's the value, today, of Amazon in that space. Disrupting transactions is irrelevant. Now, I'm not saying the tricky bits can't be disintermediated. That's already started. But TBH if and when that does occur, why go to all that trouble and leave the transaction system as a fee taker? Disintermediate that too.
- arbol 9y ago
  Supply chain mistakes are costly and can result in unsaleable stock. There are existing standards (see GS1) but they are full of errors due to disparate systems and varying interpretations of XML messages. Smart contracts have the potential to reduce the cost of goods delivery through shared supply chain management systems, placing less risk on a potential 'new to market' market place or 'direct to consumer' seller. These are both direct challenges to Amazon and eBay. Expensive digital assets will always require a mediation fee. You could write your own contract to transfer the assets for free but you would probably want to pay to guarantee that it worked. Of course, if the digital transaction is of a suitably small value, a direct transfer of assets may be preferred via a self-authored contract. The loser in this case is VISA or whichever payment provider scalps off the top of music/movie/book/... sales currently. I wasn't trying to specifically cite transactions as being the main target of smart contracts (although they are the most obvious). The example was to show how existing processes of a transactional nature can be recreated with less complexity and therefore utilise less resources. There is an endless list of examples where this holds to some extent.
  - lucozade 9y ago
    If you have a big supply chain, like Amazon does, then managing the complexity of that chain is a tough problem. I happen to agree with IBM that a distributed ledger like technology can help with that. Not a public one, obviously as that would just be silly, but it would make sense for Amazon to run one. We're doing a variant of this in my field. But it doesn't make any sense to use smart contracts to manage the supply chain complexity of a business that, by definition, doesn't have a complex supply chain i.e. a direct to customer seller. Especially a seller of digital assets. > Expensive digital assets will always require a mediation fee Why? Most mediating supplies an overt service for those fees as well as the mediation. For example, producers at studios, editors at publishers, rights management and marketing/discovery at Netflix etc. Remove the value add and you're left with a commodity. In that scenario you might have very small margin services but, just as likely, would be ad led services for free. I mean, they have useful financial information. There'll be a group that doesn't want that but there's no clear evidence it'll ever be more than niche. So yes, there's value there but I just can't see any reason, for any of the examples you cite, to believe that incumbents will be challenged. If anything it may help entrenchment.

by arbol 9y ago

lucozade 9y ago

> They do not move the physical gold If you're not moving the gold, who needs escrow? You're just describing a cash settled spot market. > the cost of trusting a delivery person remains fairly constant Indeed, as you're having no effect on either escrow or post-settlement delivery. But that's my point, smart contracts don't make a blind bit of difference. > Amazon and eBay are also facilitators of value transactions The value is in the goods turning up. Smart contracts don't help at all outside digital assets. Or more specifically, the payment process is trivial compared to the logistics process. The value is almost all in the latter. That's not generally true for digital assets. But today, the main challenges with those are to do with rights and marketing/discovery. Again, that's the value, today, of Amazon in that space. Disrupting transactions is irrelevant. Now, I'm not saying the tricky bits can't be disintermediated. That's already started. But TBH if and when that does occur, why go to all that trouble and leave the transaction system as a fee taker? Disintermediate that too.

arbol 9y ago
Supply chain mistakes are costly and can result in unsaleable stock. There are existing standards (see GS1) but they are full of errors due to disparate systems and varying interpretations of XML messages. Smart contracts have the potential to reduce the cost of goods delivery through shared supply chain management systems, placing less risk on a potential 'new to market' market place or 'direct to consumer' seller. These are both direct challenges to Amazon and eBay. Expensive digital assets will always require a mediation fee. You could write your own contract to transfer the assets for free but you would probably want to pay to guarantee that it worked. Of course, if the digital transaction is of a suitably small value, a direct transfer of assets may be preferred via a self-authored contract. The loser in this case is VISA or whichever payment provider scalps off the top of music/movie/book/... sales currently. I wasn't trying to specifically cite transactions as being the main target of smart contracts (although they are the most obvious). The example was to show how existing processes of a transactional nature can be recreated with less complexity and therefore utilise less resources. There is an endless list of examples where this holds to some extent.
- lucozade 9y ago
  If you have a big supply chain, like Amazon does, then managing the complexity of that chain is a tough problem. I happen to agree with IBM that a distributed ledger like technology can help with that. Not a public one, obviously as that would just be silly, but it would make sense for Amazon to run one. We're doing a variant of this in my field. But it doesn't make any sense to use smart contracts to manage the supply chain complexity of a business that, by definition, doesn't have a complex supply chain i.e. a direct to customer seller. Especially a seller of digital assets. > Expensive digital assets will always require a mediation fee Why? Most mediating supplies an overt service for those fees as well as the mediation. For example, producers at studios, editors at publishers, rights management and marketing/discovery at Netflix etc. Remove the value add and you're left with a commodity. In that scenario you might have very small margin services but, just as likely, would be ad led services for free. I mean, they have useful financial information. There'll be a group that doesn't want that but there's no clear evidence it'll ever be more than niche. So yes, there's value there but I just can't see any reason, for any of the examples you cite, to believe that incumbents will be challenged. If anything it may help entrenchment.