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Reduction of Asymmetric Information

[vc_row css_animation=”” row_type=”row” use_row_as_full_screen_section=”no” type=”grid” angled_section=”no” text_align=”left” background_image_as_pattern=”without_pattern” css=”.vc_custom_1463146108811{padding-bottom: 20px !important;}”][vc_column offset=”vc_col-lg-offset-1 vc_col-lg-10 vc_col-md-offset-1 vc_col-md-10″][vc_column_text][dropcaps type=’normal’ font_size=’45’ color=’#191919′ background_color=” border_color=”]I[/dropcaps] have received several e-mail from readers that prompt me to further explain my stance on the effects that blockchain will have on asymmetric information.

Although it is a generalization. Increased uses of blockchain will lead to reduced asymmetric information. The rationale is simple, as shown in Cryptocurrencies, the open source nature of a reliable blockchain framework allows the public to reliability display a full list of transaction that takes place within each blockchain. The service provided by companies that allow users to view transactions is known as “explorers” or “blockchain explorers.”

If a user is aware of a transaction id or wallet is then he/she would be privy to all information on the wallet. Here’s the catch, even though everyone can observe what is happening they cannot intervene. In other words, you could be staring at a terrorist’s bitcoin wallet but will not be able to do anything about it with a few exceptions.[/vc_column_text][/vc_column][/vc_row][vc_row css_animation=”” row_type=”row” use_row_as_full_screen_section=”no” type=”grid” angled_section=”no” text_align=”left” background_image_as_pattern=”without_pattern” css=”.vc_custom_1463146163185{padding-top: 50px !important;padding-bottom: 44px !important;}”][vc_column width=”1/3″][vc_single_image image=”63″ img_size=”full” qode_css_animation=””][vc_separator type=”transparent” thickness=”0″ up=”0″ down=”30″][/vc_column][vc_column width=”1/3″][vc_single_image image=”64″ img_size=”full” qode_css_animation=””][vc_separator type=”transparent” thickness=”0″ up=”0″ down=”30″][/vc_column][vc_column width=”1/3″][vc_single_image image=”65″ img_size=”full” qode_css_animation=””][vc_separator type=”transparent” thickness=”0″ up=”0″ down=”30″][/vc_column][/vc_row][vc_row css_animation=”” row_type=”row” use_row_as_full_screen_section=”no” type=”grid” angled_section=”no” text_align=”left” background_image_as_pattern=”without_pattern” css=”.vc_custom_1463146184322{padding-bottom: 70px !important;}”][vc_column offset=”vc_col-lg-offset-1 vc_col-lg-10 vc_col-md-offset-1 vc_col-md-10″][vc_column_text]

First exception

A fork. In layman terms, this means that. A developer which has access to the blockchain framework intervenes with what is happening. Even though a blockchain is an open source, amendments can be made to the code as long as users are supportive of this.

Why do we need the support of users? Simply put, a system without users will close. A business without patrons will eventually be bankrupt. [See Cryptoeconomics as a chapter in microeconomics]

Technical details aside, as long as sufficient users are in support of this. The developer can go ahead and carry out a fork. There are different types of forks. A Hard Fork and a Soft Fork. The fork mentioned above is a Hard Fork which affects all users of this specific framework. A Hard Fork is a change to the system by intervention, what many people would recall as a “rollback.” In cryptocurrency sense, hard fork creates a legitimate main currency with the altered future.

Altering the future?

Hard Fork will lead to two variants of the current cryptocurrency,
First crypto: The legitimate main currency with the altered future. Supported by most users
Second crypto: The currency that continues unaltered

Example: Ethereum faced this issue for which the framework/code of Ethereum itself had a flaw. This resulted in a hack occurring. Users had their Ethereum stolen by a hacker. The Ethereum developers decided to intervene by carrying out a hard fork. Altering the future, they advocated a roll back. The split created two identical currencies. The first (altered crypto) and the second (unaltered crypto).

The first cryptocurrency is the one for which the hacker lost his ill gotten gains. The intervention resulted in a “time travel” back to a timestamp before the hack occurred.

The second cryptocurrency is the second of the fork. The hacker gets to keep his ill gotten gains. The cryptocurrency exists but lacks the support of the community. The second crypto is the “real original” cryptocurrency.[/vc_column_text][/vc_column][/vc_row][vc_row row_type=”parallax” parallax_content_width=”in_grid” text_align=”center” background_image=”66″ full_screen_section_height=”no”][vc_column][vc_separator type=”transparent” thickness=”0″ up=”0″ down=”177″][icons icon_pack=”font_elegant” fe_icon=”icon_quotations” size=”fa-lg” type=”square” custom_size=”45″ custom_shape_size=”40″ border_radius=”100″ border=”yes” target=”_self” icon_color=”#ffffff” icon_hover_color=”#141212″ background_color=”rgba(255,255,255,0.01)” hover_background_color=”#ffffff” border_color=”#ffffff” border_width=”1″][vc_separator type=”transparent” thickness=”0″ up=”0″ down=”35″][vc_column_text]

We can’t solve our problems with the same thinking that we used when we created them.

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– Albert Einstein

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Frictional Unemployment during Asymmetric Information Reduction

When information is reduced, a set of expectations formed for the number of unemployed workers.
The hypothesis is that that is a positive correlation between reduction of information asymmetry and the number of employed workers.

Increased information asymmetry results in increasing amounts of unemployed workers
Decreased information asymmetry results in decreasing amounts of unemployed workers

Information asymmetry has been elaborated on in industrial economics / industrial organization. See Tirole.

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3 thoughts on “Reduction of Asymmetric Information”

  1. Robert Nordstrom

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  2. Robert Nordstrom

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