Hamlet Loves Decentralization

“What a piece of work is a man!” cries Hamlet as he laments Rosencrantz and Guildenstern’s savage double-cross. They morph from Hamlet’s childhood friends into sleazy middlemen, spying on behalf of King Claudius. The divide between man’s potential for trust and life’s double-dealing, rotten reality lays Hamlet low in depression.

Life is riddled with middle-men like Rosencrantz and Guildenstern, fronting a smiling, back-slapping facade while secretly plotting your demise, or at least angling for a payday. The middle-man is everywhere, all the time. He is your cashier at the grocery store, swapping money for produce; he is your broker when you rent an apartment, your salesman at the used car dealership.

The most energizing idea to blockchain entrepreneurs is eliminating middle-men, bridging trust gaps between transacting parties with cryptography, accelerating transactions, and slashing fees: like eliminating the $5 billion Western Union charges its customers to move $80 billion around every year.

The role middle-men play in economic transactions is the subject of Nobel Prize-winning work. George Akerlof published “The Market for Lemons: Quality Uncertainty and the Market Mechanism” in 1970, winning the Big Award for demonstrating the breakdown of markets when information available to sellers is not available to buyers. Akerlof takes used cars…