For some persons, it could be challenging to understand the blockchain’s technology processes and their impact on finance and the economy. Blockchain minimalists, on the other hand, have the perception that the cost of transactions (i.e. micro-payment system) and scalability are major hindrances to blockchain adoption.

Arguably, you can say that transaction cost and scalability are major reasons why blockchain adoption is not yet in place because, without intrinsic value, there would be no consensus. The financial institutions and the government which are centralized bodies tend to shy away from this technology. Imagine when the middleman or intermediary in a system is removed, leaving them without economic rent or profits. Hence, their skepticism is understandable.

Before the invention of the internet in the 90s, no one could foresee any of the recent innovations that we’re currently living through. A concept like web3- a product of the blockchain and other technologies put together - would’ve been thought impossible. The maximalist recognizes that pessimism is to be expected with new technology, however, he also acknowledges the potential of the new technology that fuels a changing future. One such potential lies in the databases and ledger management system that blockchain technology

powers.

A use case of accessing financial records of an individual acquiring an estate that involves a huge amount being transacted, but is prone to fraudulent or criminal attack in the place of the traditional database, comes to mind. However, privacy can be achieved in the permissioned blockchain system to reduce this risk effectively. Contrary to this innovation the blockchain minimalist will say that it is no longer a blockchain since a permission system allows immutability to be mutable.

On that note, It is important to clarify that a system that has an append-only-log, timed-stamped, hash function, and a consensus or collective action is referred to as blockchain technology.

Benefits of the blockchain technology

Identity Verification Cost

It is believed that the verification cost which involves the direct and privacy cost, censorship risk, settlement and finality risk, cost of trust, and economic rent can be improved through the use of blockchain technology.

Here it is easy for individuals to create their profiles by giving in a little amount of data in exchange for services needed. Uber technology which has developed over the years founded in 2009, is the global ride application that has made it convenient for the world to access services at ease without obstruction. This innovation simply requires a lower identity and verification cost for a friendly user interface, just by inputting data.

This application of blockchain innovation slowly gets to secure data of the customer directly with the company without the interference of the driver and lowers transaction costs. Unlike the traditional database which will have to reconcile with a ledger with lots of backlog of data or back offices.

Network cost

Most of the technology in the blockchain ecosystem is reasonably cheap. This can be achieved with the token incentive system rewards, affinity or identity, start up-cost, and operating cost. Tokenization places an important role in crowdfunding which is a use case strategy for development.

Tokenization serves as an incentive for starting up a company in the blockchain niche. This gives value to networking and moving property that would lead to smart contracts reducing the cost of the centralized sector.

Blockchain Economics

According to Metcalfe’s law which states that

“The value of a telecommunications network is proportional to the square of the number of connected users in the systems”

This concept proves a non-linear trade some companies like Apple, Amazon, and Google utilize.

The blockchain Trilemma proposed that the security, cost of the transaction, and decentralized application can not be fully attained in a system. This, however, strikes a balance between centralized and decentralized systems.

This blockchain innovation can pull down the slope of cost in the decentralized network unlike in the centralized system or traditional database. The ledgers are recorded property rights that enable some sort of privacy. The blockchain allows some form of competition that involves the freedom to write or enter data as a miner or contributor in the public blockchain and the ability to compete with other nodes for a fork to be made.

Although the permissioned blockchain system seems to break this Trilemma to an extent, it eradicates the waste of resources effectively.

The Minimalist dilemma includes the following;

1. Cost of transaction in the case of Bitcoin as an intrinsic value.
2. Technical challenges include scalability and payment system.
3. Multiple tokens that lack intrinsic value.
4. The volatility of price tokens that have a poor store value.
5. Limited use of the crypto asset as a medium of exchange.
6. Not accepted as a legal tender for economic rent.
7. Having multiple native tokens which contradict the economic value.
8. Blockchain Dapps moving to the centralized system.
   

With these views, it is easy for one to ask if there is still hope for the future of blockchain. You as a person can have different perceptions about blockchain technology and over the years innovators have developed theories that have manifested. Although the challenges are not yet resolved, possibly with time and years to come we can now decipher which technology best suits our interest in existence.

Currently, the use of blockchain applications is slowly paving the way in the economy, especially the Developed countries in different sectors of the economy like the Military, politics, health care, and businesses. This is to ensure privacy, security, and transparency with the use of cryptographic models.

Conclusion

Equilibrium should be achieved in the analytical deliberation of blockchain technology. The advantage of the innovation implied and the challenges minimized for effective implementation, else there would be a deficiency in the system which might disrupt the economy. However, an economic model should be actualized to enhance a balance amongst stakeholders in the ecosystem and the world at large.

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