We often hear how blockchain can benefit capital freedom, driving growth by making investment more efficient. However, we should also consider “service freedom” – the freedom of those producing goods and offering services.
When we first set out our vision for Nash, we focused on the possibilities of capital freedom. Blockchain networks are borderless by definition. They make it simpler for people to store and transfer money and have created novel investment and financial instruments. Underserved and underdeveloped markets gain access to new wealth and opportunities as decentralization liberates them from inefficient financial infrastructure that would be cost prohibitive or not profitable for its providers.
Capital freedom benefits economies as a whole, but these arguments focus on the role of investors. There are another set of arguments to be made addressing the other side of the equation: producers.
As with capital freedom, what is crucial is increased efficiency. Blockchain allows for easier connections between consumers and producers – either making connections direct, or allowing for an automatically managed and totally transparent supply chain.
Let’s consider two examples: coffee farming and energy.
Think what it would mean if a transaction purchasing coffee could immediately deposit funds with a farmer in Guatemala. Other service providers within the supply chain would also receive their cut (e.g. shippers), but middlemen coordinating the whole process could be removed. The supply chain and distribution of profits could instead entirely be tracked and coordinated on the blockchain.
Automated supply chains aren’t just more efficient in themselves. By being transparent, they encourage further efficiency. Producers can see exactly what is happening with their goods further down the chain and, as a result, consider changing who they work with. Similarly, coffee consumers can find clear information about the farms their beans originate from and what has happened to them. They can likewise make purchasing decisions based on this additional information. A thorough knowledge of the provenance of beans is already of major importance for many coffee consumers.
This way of increasing efficiency gives value back directly to those who produce it. By empowering producers, not middlemen, growth itself can become more decentralized and fair, rather than remaining centralized around intermediary providers. Faster localized growth will immediately be felt in local communities.
A related example is energy, discussed in detail in a recent study by PwC.
The cost of solar panels and other renewables is falling, while batteries are becoming ever more efficient and affordable. As a result, individual households increasingly find themselves able to generate their own electricity and become independent of the grid.
This opens a space for “prosumers” – consumers who produce their own electricity – to take market share from centralized energy providers. For instance, you could purchase excess energy from your neighbor’s solar panels, or make use of a turbine run by the local community. For such a system to work, provision and payment has to be organized efficiently. Blockchain is an ideal solution, connecting producers directly with consumers.
Of course, energy is just one example of such an application of blockchain. The sharing economy as a whole could be revolutionized by blockchain-based transactions, removing intermediary platforms like Uber and Airbnb. Once again, producers and service providers are empowered directly, rather than middlemen.
These developments are a number of years in the future. However, as blockchain becomes more accessible to businesses, the benefits it can bring won’t be ignored.
Our work at Nash aims to accelerate the adoption of blockchain solutions. We hope to continue evolving as this exciting technology advances further.
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