Transformation of Socioeconomic Relations in the Age of Blockchain-Based Information Platforms

Transformation of Socioeconomic Relations in the Age of Blockchain-Based Information Platforms

This is an original article by Alexander Kud published on Facebook.

Today socioeconomic relations undergo a number of radical changes that concern social pillars, value system, business practices and approaches to regulating relations. Technologies that directly influence such transformation are created and implemented faster than they can fully realize their potential, which significantly slows down the development of the market of information resources, products and services.

Prerequisites for the age of information platforms

Modern society has socioeconomic problems that have been impossible to resolve for decades due to the downsides of the key element of all social processes — the human factor. The crises in the field of social economy, various violations of rights and freedoms, corruption, as well as the use of money manipulation mechanisms that have corrupted all areas of the financial sector, are directly related to the human factor.

The economic theory has different methods for increasing the efficiency of allocating resources, the use of which leads to the improvement of economic indicators of a state. The history of countries can tell us about a lot of them: creation of targeted strategies, formation of various institutions and execution of a large number of reforms, which resulted in significant expenses and limitations on the freedom of society.

As a result, none of the methods allowed them to achieve their goals in the long term, which is evident from the number of currently existing issues of social and economic nature. Such issues are reflected in the global economy, in particular, in the banking sector, legal proceedings, executive and legislative branches, which creates the general social tension and undermines the level of trust in the state and in society as a whole. Citizens of any country should not live in a world, where it is easier to get by on the minimum wage established by the government than open their own business by going through all bureaucratic procedures. For a long time now, society had the demand for justice, transparency, openness and accessibility, but there is a strong belief that it can be achieved only by giving up on personal interests.

I am certain that nowadays we have the tools to achieve real goals, which don’t require a radical paradigm shift from society and which can be used effectively. The age of information platforms is coming. Information technologies have been developing for many years, and they lacked the final component that would allow them to ensure security and at the same time provide transparency of data. Today we can observe a complete digitalization, and we realize that, ultimately, all socioeconomic relations in society will move to information platforms.

Digital assets (information resources) and the model of relations that emerged along with the development of the distributed ledger technologies, just like all other achievements and discoveries of humankind, directly influence the socioeconomic relations and transform them on both domestic and global levels.

However, the human factor is what causes the emergence and development of inventions and technologies that impact the way of life and thinking. Based on personal needs, people invent things in order to benefit from them, but due to prejudices of society, limited thinking and absence of access to many information services, they narrow down the potential application of any new discovery.

Blockchain as the guarantee of fulfillment of obligations by the parties

We know that most inventions of humanity are aimed at improving the quality of life, and the blockchain technology is one of them. Blockchain caused the reevaluation of the role of values. When it comes to money, for example, society has demand for a model of mobile management (cashless storage, digital transfers), minimal time and monetary expenses for such management without intermediaries, as well as the ability of independent management regardless of time and location. Information platforms, which function on blockchain, can provide the fulfillment of such requests not just with money, but with any object that has value for its owner by means of digital assets.

Aside from an efficient recording system, which, first and foremost, will be appreciated by customers, blockchain has a huge application potential. The emergence of this technology gave the ability to create unique objects in digital space without ways to copy them and, what’s more important, the ability to manage such objects. With the help of blockchain-based information platforms, people can independently create digital assets, which technically allow managing a set of rights (rights of ownership, use and disposal) to any value and monitor the circulation of such rights in a decentralized recording system. This will provide access to a secure exchange of values with the guarantee of inability and impracticality of copying them in digital space: all values (rights, assets, results of intellectual activity and other objects) are unique and authentic.

The exclusion of a link such as “intermediary” from the interaction of parties is a significant advantage of socioeconomic relations based on the blockchain technology. This model of relations is considered more reliable and secure than the “intermediary” one because the role of an intermediary is performed by the technology itself (in particular, by smart contracts). Thus, by excluding intermediaries, and therefore, any manifestation of the human factor, blockchain, the data in which can’t be altered with no trace, becomes the guarantee of the fulfillment of obligations of the parties.

First, the new model of relations will affect the activity of businesses: the absence of an intermediary will allow them to save time and money, which will significantly simplify and expedite the process of achieving socioeconomic goals. History of all actions in this model of relations is fully recorded and displayed in the distributed ledger, which allows everyone to avoid the negative impact of the human factor.

Digital assets as a new way of regulating legal relations

The equivalent of widely accepted norms that is realized in digital space and that operates autonomously is the regulator of such legal relations. We are talking about digital assets as a new type of digital contracts that function based on the blockchain technology and can exclude any intermediary in relations between parties. Meanwhile, an information resource is one of the objects of blockchain, which is information structured and organized in a certain way, recorded on a tangible medium. This information can be stored, transferred, used and replenished. The information resource has the properties of practical significance and usefulness, as well as the possibility of multiple use.

Thus, digital assets, having unique attributes and properties, circulate in the distributed ledger (blockchain) in accordance with certain terms and conditions specified in the information resource of this digital asset, which ensures the autonomous management of legal relations without third parties. Such terms also have a direct regulatory impact on the parties of relations that arise due to circulation of digital assets. This way of managing values is a lot more efficient because it does not require time and additional resources, and what is also important, it’s implemented in the trust-based environment. Such factors will definitely lead to the transition of private and public legal relations to information platforms, which will cause the emergence of the new market of information resources, products and services, which is estimated by various specialists to be worth hundreds of trillions of U.S. dollars.

At the global level, the model of relations, the implementation of which is possible as a result of using digital assets, can contribute to solving a number of socioeconomic issues. Blockchain allows us to realize a completely transparent and reliable recording of data, and by means of digital assets — to ensure targeted and, most importantly, rational use of all resources.

Prospects of new socioeconomic relations

The developed and developing countries are gradually transitioning to digitalization of the majority of state and municipal institutions. The blockchain technology will take a special place in socioeconomic relations between the state and its citizens ensuring a safe and reliable recording of data, as well as transparent and efficient management of values. The role of states will be to ensure the fulfillment of certain requirements for information platforms and to create all the necessary conditions for the further development of information technologies.

We realize that modern community is at the brink of transferring the private and public fields of social life into the format of information systems, at the brink of a new age of relations that develop in a transparent, safe and reliable digital environment. Blockchain won’t be able to solve the ingrained socioeconomic issues, but it will certainly contribute to the emergence of a new economic model with a progressive regulatory mechanism based on digital assets as information resources.

The evolution of information technologies has already caused the emergence of blockchain-based information platforms, the integration and development of which will lead to greater trust in society, a high level of its security and freedom, and, therefore, the transition to a new stage of socioeconomic relations.

 All global processes are developing very rapidly, and not only states, but each and every one of us has to react to them in time in order to have the best positions during the transformation of socioeconomic relations. This means that today we need to study various information platforms and decide which platform to build new legal relations on. After all, our future depends on that choice!