A New Perspective: Introducing the Decentralized Economy

Article by Tom Serres

An efficient economy will always rely on the speed and depth of information to establish equilibrium. Anything short of perfect, balanced information creates inefficiencies that result in higher prices, supply shortages, and deadweight loss that can have a cascading effect throughout all corners of industry.

The expectations of modern consumers have skewed and strained these economic paradigms like never before. People can now shop wherever they want, whenever they want merely by picking up their smartphones, leaving suppliers scrambling to keep apace.

To further exaggerate the inefficiencies, despite the recent influx of transformative technologies like AI, IoT, and blockchain into the supply chain, the innovations lack consistency, uniformity, and scale. Such shortcomings keep the supply chain susceptible to communication gaps and information silos, preventing the seamless distribution of information and goods. Enter the need for a decentralized economy.

Autonomous Machines for Human Benefit

Traditional supply chains are segmented by numerous participants that lack sufficient incentive to share information amongst other participants due to the economic benefits derived from asymmetrical data. Those with more relevant data hold a substantial competitive advantage over those that don’t and, therefore, are not motivated to change their processes and procedures. While such an imbalance often separates the winners from the losers based on traditional supply chains and trade, it’s ultimately the consumer base that suffers most through higher prices, inventory shortages, and fewer choices in goods available.

A decentralized economy removes the data-based competitive advantage held by few for the benefit of all. Rather than creating value through the inefficient distribution of information, a decentralized economy rewards participants that freely share logistics data and invest on the human talent and innovation that will drive the economy of the future.

This adaptable, cognitive network of interconnected technologies replaces the latencies generated by human interference in supply chains and replaces it with machine trust, ultimately for the good of the consumer. Simply put, humans are removed from much of the logistics equation to maximize the benefit we derive from a frictionless, imminently efficient trade framework as long as the technologies are given sufficient autonomy. Humans must learn to get out of the way for a decentralized economy to function.

Change Is Coming

A decentralized economy is one with few, if any, barriers to the immediate and open dissemination of information, removing impediments like third-party intermediaries and clearinghouses along the way. Relative to the supply chain, decentralization incorporates innovation in the most efficient, effective manner possible. Technological solutions from assorted vendors adhere to universal standards in a decentralized framework, making communication between the many segments along the supply chain seamlessly linked to avoid information silos.

A push towards decentralization is of a piece with historical economic trends. An automated, autonomous supply chain is a fundamental component of that evolution, utilizing blockchain to streamline the many processes while removing unnecessary third parties from the framework.

When supplemented by the unique, prescient abilities of AI and IoT-based technologies, transactions occur directly between the consumer and vendor, the logistical data feeding into interconnected systems that instantaneously pull information regarding production, distribution, and delivery to find the most efficient path. The process automatically integrates short-term variables like weather patterns and production capacity along with shifting consumer affinities and other long-term factors to link supply with demand in the most optimal combination possible.

A decentralized economy incentivizes shared information across a cognitive supply chain driven by AI, IoT, and on-demand manufacturing as well as the blockchain technologies that connect all of the components into a shared single state. Firms are rewarded with unprecedented levels of value by innovating rather than operating in closed networks that ultimately hurt the marketplace through excessive deadweight loss. Individual companies and industries that invest in technologies like AI and IoT are deriving current benefit while simultaneously establishing a foundation for the cognitive supply chains of tomorrow.

Once all of the necessary technologies are embraced on a wide scale, the marketplace will be transformed into one that is extraordinarily nimble, making spontaneous changes as needed to maximize efficiency and value. The consumer will be able to place an order on their phone for a product that is then immediately produced by additive manufacturing technologies like 3D printing. Payment is made directly from the buyer to the vendor through a highly secure and reliable transaction network driven by blockchain without the need for a bank or credit card company.

Once the product is manufactured, it is distributed directly to the consumer through an interconnected network of participants and capital assets in the most effective manner possible. Variables like poor weather and road conditions are instantaneously worked around to minimize delay of delivery by AI-based platforms and IoT-equipped machinery. The entire supply chain in a decentralized economy is autonomous and prescient, removing unnecessary intermediaries while maximizing speed and agility through logistics networks linked and fortified by blockchain. Those that make the necessary investments to participate in such a decentralized economy are building the framework to unlock unfathomable levels of created value in the future. To learn even more, check out our white paper.