Transaction Costs, Platforms and Dodos – Different Reflections on the Law of Blockchain Islands

This article is in response to Chang's article "The Law of the Block Chain Island" . As a small number of independent thinkers who can produce independent thinking in the blockchain field, I appreciate the long-term. I have some different perspectives, write them down, and criticize them.

(1) Blockchain is not omnipotent

For Coase's "transaction cost" theory, I also wrote a post-reading feeling:

The three advantages of the blockchain technology summarized by Changchun in reducing transaction costs are not valid.

First, severability does not mean solving the measurement cost problem. Just as you have a ruler, you can't say that you have solved the height measurement problem of Mount Everest. What's more, your measurement object is not basically the same as the height of the mountain.

Second, interchangeability is a pseudo-concept. Atomic assets correspond to digital assets and should not be called “interchangeability” but a “correspondence”. The cost of this correspondence is still high. First of all, the establishment of atomic assets is itself a costly thing and depends on the expression of the law. The maintenance cost of matching atomic assets to digital assets is also unattainable. Take the automobile sales in the original text as an example. The auto property rights of the atomic world are expressed by national laws, and disputes can be used for legal judgment. But how does this car correspond to the digital world in a unique form, and no practical solution has yet been seen. For example, this car may be stolen, it may be bad, or it may be sold by more than one car. These blockchains cannot be solved. Blockchain is the structure of the digital world and can only solve the problems of the digital world.

Third, trustworthiness is wishful thinking. At present, the anonymous credit accumulation of the blockchain can only represent the past, and the past and the present cannot represent the future. Credit accumulates to an anonymous address, which may be a bad person behind it. If you want to raise the leek and then cut it, you may also transfer the address to someone else.

(2) Limitations of platform-type enterprises

I am not used to "service companies", I prefer to call them "platform enterprises." I feel that what we said should be one thing. Platform-based companies build a “market” to match transactions and provide services to reduce transaction costs for both buyers and sellers.

In theory, direct transactions between buyers and sellers are the most efficient, but because of the existence of transaction costs, the two sides of the transaction naturally do not trust, which gives platform-based enterprises an opportunity. Internet platform-based enterprises have eliminated the layers of agents in the traditional sales chain and become the final intermediary. The transaction costs are greatly reduced. But the company itself is for profit, so reducing the transaction cost indefinitely is not the purpose of the platform. Its purpose is to maintain a balance point: it can get the most income and can dispel the competitors. Didi, the US Mission to the driver, the merchant's draw, Taobao's traffic advertising. This is the limitation of platform-based enterprises.

In the article, Changchun does not explicitly give the criteria for judging successful companies. Is it market value or employment? The example of bytebeat, raised the question, did not give an answer, you said that the public's estimate of this is wrong, but did not say where the error is. This is not convincing.

(3) Dodo

Both the market and the natural world are the survival of the fittest, but they cannot be simply analogized. The natural world is a zero-sum game, and the market is based on cooperation. At the end of the article, the large animals were compared to traditional enterprises, and the Internet and blockchain enterprises were compared to small enterprises. It is an unfounded logical jump.

The island law refers to the isolation of the connection with the outside world. The poor resources on the island lead to the reduction of large animals, while the small animals expand their volume when the competitive pressure is small. At the same time, this island ecology is also fragile, and once there are invasions of alien species, these backward species will be eliminated. Such as the Dodo. It was originally a kind of pigeon, because the evolutionary pressure of "gentle township" was too small to fly. The ultimate fate of extinction.

I believe that no company will follow the example of a dodo.

Large animals are more economical, and you can find detailed arguments in Jeffrey West's book Scale.

(4) Direct transaction

A blockchain is a structure of the digital world. Traditional assets are in the atomic world, and the assets of the atomic world depend on legal expressions. The underlying shock of Bitcoin is that without the law, the representation of assets and the transfer of ownership can be accomplished by a mechanism of the digital world.

One thing we are doing. It is anchored by human genome data, and allows users to “born” from the digital world to the digital world through gene sequencing. Issue one of your own non-homogenous personal currencies for everyone. Accumulate credit on your own body. Reduce transaction costs again by direct trading.

After the official launch of the gene currency, I will write a book on the Origin of Life and Money to compare the commonalities between the two.

Dou Yingxin

June 12, 2019