Transformation of Blockchain as Social Good

Author Name(s): Marat R. Safiullin, Mikhail V. Savelichev, Leonid A. Elshin
Author Email: Leonid.Elshin@tatar.ru

Abstract

Blockchain is currently considered as a key technology that can significantly reduce the level of transaction costs in the economy, reduce the level of economic and financial risks, and increase the efficiency of economy and financial sector. In this regard, it is relevant to study the possible trajectories of blockchain transformation under conditions when the state has not yet developed a universal model for blockchain integration into the economic system. The blockchain research method as a good is represented by economic sociodynamics, which studies the typology of goods and their transitions under the influence of interests that society presents to a particular product or service. The models of dynamics of social groups of M. Olsen and R. Putnam are also used. The endowment of blockchain with the features of a social good by the state shall not be accompanied by the deprivation of blockchain of the properties of a private good that can satisfy private, not just public interests. This will create conditions for increasing the share of Putnam’s groups and reducing the share of Olsen’s groups, which will increase the level of trust in society and stimulate the improvement of macroeconomic indicators, such as economic growth and increase in the GDP investment share.

Introduction

The potential for widespread use of blockchain technology in the financial and economic spheres is due to the possibility of a significant reduction in transaction costs by increasing the security of transactions, reducing the cost of involving third parties in transactions, and using smart contracts. [1, 2, 3] The goal of our study is to consider blockchain as a good, the consumption of which creates groups that differ in their impact on society as a whole. [4, 5] In terms of view of economic sociodynamics, blockchain is a communal good that satisfies private interests, but at the same time is in the process of acquiring features of a social good, that is, the ability to satisfy the interests of society, not reducible to private interests. The blockchain sociodynamics as a good can be considered within the framework of the models propsed by M. Olsen [6] and R. Putnam [7]. At the stage of blockchain emergence as a communal good, Olsen’s groups formed around it, while endowing the blockchain with the features of social good created favorable conditions for the formation of Putnam’s groups. Such dynamics of various types of groups allows explaining the reasons for the increase in trust in society, provided that the blockchain goes into the category of mixed communal good. At the same time, the desire to limit the blockchain to exclusively social utility will resume the process of forming Olsen’s groups around this technology, which can level the trend of increasing trust in society and lead to an increase in transaction costs.

Conclusion

The mechanism of the relationship between blockchain evolution as a good and group dynamics in society presented in the article indicates the need on the part of the state to preserve the attributes of both social and private good for the blockchain, without limiting the scope of its application exclusively to public sectors. Thus, its private and social usefulness will be maximized as a benefit conducive to increasing confidence and reducing transaction costs.

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