Rent Seeking in a Decentralised Economy

Rent seeking behaviour refers to being an intermediary in a process without adding any value to the end-user. It is characterised as being very difficult or impossible to bypass a rent seeker.

The modern business society is littered with rent seekers. They purposefully build high entry barriers and monopolise the means of crossing those hurdles while profiting from isolated networks. The digital era brought accelerated globalisation by democratising information. However, true inclusivity requires not only seamless transfer of information but also of value. Massive entry barriers to the transfer of value still exist today, constrained by rent seeking behaviour from professional industries. Trust has become the most profitable service in the world. Banks, lawyers, accountants, agents and politicians act as trusted intermediaries, abusing their positions by extracting rent when allowing others through entry barriers. This service often comes at no cost to them, but their monopolistic features allow for infinite mark-ups.

Blockchain technology will democratise trust in the same manner as the internet democratised information. By removing the human element from a clearinghouse and allowing anyone in the world to build trust into a piece of software, the missing piece for true globalisation has been found. A Blockchain knows no geographical border. It does not record social class, race, religion or distance. It provides all of its dependants with equal, immutable trust.

During the talk, discussed the inner workings of a blockchain and how it establishes this immutable trust. I will explain how smart contracts might fundamentally change many industries or even replace them, but also bring unprecedented economic growth by adding billions of people to a formal, global financial system.