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You are here: Home / Featured Insights / DeFi / Blockchain From An Economics Perspective

Blockchain From An Economics Perspective

posted on May 16, 2022 by Economics Design

Economics Design

Disclaimer: This is not financial advice

Introduction

There are a lot of people talking about blockchain from a technology perspective or a financial perspective and that’s good but today we want to talk about it from an economics perspective.

Capital and Labour

If you look at economics today, the two ways you earn wages and revenue are capital and labour. You either let capital work for you or you let labour work for you so it’s a very simple understanding of how we make money or how companies make money.

Now If you look at these big companies like the FAANG, they make money because they’ve got algorithms. Capital is not just the usual things that we talk about like land, resources, and human capital but also could mean machinery like algorithms, data, and all these different things that help the companies or help the capital owners to earn money. As we see how machinery and robots are taking over what humans used to do, the rewards go back to capital owners and so there’s very little left for the labour. Unless you can beat the machinery you’re not that worthy because your labour is easily subsidized or substituted by machinery and all the revenue goes back to capital owners and that’s one of the problems that we see today.

Going back to Facebook and Google, these companies own algorithms to help push and aggregate information and data to different kinds of people which is dangerous in its own right but also quite efficient in its own ways. If that is what the future seems to be where the top 0.1% own all the different capital and basically control everything and then at the bottom, there will be some percentage of people that are servicing these top 0.1% and the rest of the people are just not very value-adding then it’s going to be a big chaos.

The Decentralised Future

When we look at not changing the current system but building a different kind of system for the future, the whole premise of blockchain and DLT is the idea of distribution so not just distribution in power and governance but the distribution of this thing called capital and specifically in the bottom called the machinery part of capital and that’s a very powerful thing that we’re building today.

The whole idea of the world wide web is that it’s supposed to be open source for everyone to just use and create things so it’s a base layer technological stack where we can build different things on top. This is very powerful and it’s a capital that everyone shares. As we move to web 3.0 we are also building these open-source capital or algorithms that can be distributed and collectively owned by everyone and everyone can learn to use them and build really creative things upon them. We’re seeing these new technologies and protocols that are being built and they’re all open source so anyone can just replicate them because these algorithms/machinery/this new capital now becomes a common collabourative good and resource.

One of the best things about what we’re doing with this machinery in the capital is that we create this capital and distribute it which builds this level playing field where people who are labour owners can use these open-source tools and machinery available in web 3.0 to start building and creating new solutions and value-adding products and services to turn their labour into other revenue-generating avenues.

Conclusion

One of the best things about what we’re doing with this machinery in the capital is that we create this capital and distribute it which builds this level playing field where people who are labour owners can use these open-source tools and machinery available in web 3.0 to start building and creating new solutions and value-adding products and services to turn their labour into other revenue-generating avenues

Filed Under: DeFi Tagged With: #Blockchain, Crypto, Crypto Economics, Cryptocurrency, Decentralised Finance, DeFi, Economics Design

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