Components of Coordination

The second takeaway is the same technology mechanisms allow you to operate all of the above. Smart contracts and tokens will be the default structure for any group-coordinated effort online, especially if the participants don’t trust each other.

In the past, trust was purely social (think the caveman days). Then it switched to trusted institutions (banks, governments, companies) which was a step up, but we still had to rely on the other parties goodwill, or their incentive to behave in the right way.
The problem today is that institutions have become the sole gatekeepers of trust. We are st

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Centralized trust creates negative externalities even when those at the center remain trustworthy. As the market expands, a purely person-to-person approach breaks down and would necessitate the presence of intermediaries. Intermediation, on the other hand, serves many roles, but also imposes costs, especially when the intermediary is a private com... See more

Blockchain-enforced execution of agreed contracts using consensus and transparency can, in numerous cases, reduce the need for the bureaucratic and hierarchical layers—the slow processes of legal and social recourse—that usually exist to coordinate humans to make decisions together.

On a blockchain network, nothing is assumed to be trustworthy except the output of the network itself (Werbach, 2018). On any transaction, there are three elements that may be trusted: the counterparty, the intermediary, and the dispute resolution mechanism (Botsman, 2017). Simply put, blockchain tries to replace all three elements with software co... See more

And, through programmable trust, cryptonetworks stand to enable human cooperation at a scale that is completely unprecedented. Trust is becoming unbundled, decentralized, and inverted –– instead of flowing top down from institutions to individual people, it is now beginning to emerge bottom up from individuals and software.