2 Matching Annotations
  1. Aug 2020
  2. Jan 2016
    1. This has implications far beyond the cryptocurrency

      The concept of trust, in the sociological and economic sense, underlies exchange. In the 15th-17th centuries, the Dutch and English dominance of trade owed much to their early development of instruments of credit that allowed merchants to fund and later to insure commercial shipping without the exchange of hard currency, either silver or by physically transporting the currency of the realm. Credit worked because the English and Dutch economies trusted the issuers of credit.

      Francis Fukuyama, a philosopher and political economist at Stanford, wrote a book in 1995, Trust: The Social Virtues and the Creation of Prosperity, on the impact of cultures of trust on entrepreneurial growth. Countries of ‘low trust’ have close family culture who limit trust to relations: France, China, S. Italy. Countries of ‘high trust’ have greater ‘spontaneous sociability’ that encourages the formation of intermediate institutions between the state and the family, that encourage greater entrepreneurial growth: Germany, England, the U.S. – I own the book and (shame on me!) haven’t yet read it.

      I thought of this article in those contexts – of the general need for trusted institutions and the power they have in mediating an economy, and the fascinating questions raised when a new facilitator of trust is introduced.

      How do we trust? Across human history, how have we extended the social role of trust to institutions? If a new modality of trust comes available, how does that change institutional structures and correspondingly the power of individuals, of institutions. How would it change the friction to growth and to decline?

      Prior to reading this article, I had dismissed Bitcoin as a temporary aberration, mostly for criminal enterprises and malcontents. I still feel that way. But the underlying technology and it’s implications – now that’s interesting.