<story><title>The high price of mistrust</title><url>https://fs.blog/2021/01/mistrust/</url></story><parent_chain><item><author>i_am_proteus</author><text>I appreciate the author&amp;#x27;s framing of &amp;quot;transaction costs.&amp;quot;  These costs are often hidden.&lt;p&gt;It seems that as systems scale (in size) they tend to become inherently lower-trust. Consider a physician who makes house calls (not uncommon as recently as a few generations ago, and certainly not incompatible with modern medicine) and a large medical system such as Kaiser Permanente or NHS.&lt;p&gt;The economic benefits of the larger-scale system are obvious, and are directly measured, but the economic detriment due to increased transaction costs (derived from decreased trust) are neither obvious nor readily measurable.&lt;p&gt;Upsides of systems at scale can still outweigh downsides, and often do, but I suspect many industrial systems have a maximum scale above which efficiency gains lose out to, in this author&amp;#x27;s framing, transaction costs.&lt;p&gt;This abuts certain natural &amp;quot;borders&amp;quot; for system growth, such as national (or in the case of EU, common market) boundaries.</text></item></parent_chain><comment><author>m463</author><text>One thing I took away from the beginning of Matt Ridley&amp;#x27;s book Rational Optimism is that with trust, commerce is unlimited.&lt;p&gt;And here we are stuck in this world where the computer in your pocket is untrustworthy, and you can&amp;#x27;t tell a useful benign app from an app trying to upload your life.&lt;p&gt;and it&amp;#x27;s a shame.</text></comment>
<story><title>The high price of mistrust</title><url>https://fs.blog/2021/01/mistrust/</url></story><parent_chain><item><author>i_am_proteus</author><text>I appreciate the author&amp;#x27;s framing of &amp;quot;transaction costs.&amp;quot;  These costs are often hidden.&lt;p&gt;It seems that as systems scale (in size) they tend to become inherently lower-trust. Consider a physician who makes house calls (not uncommon as recently as a few generations ago, and certainly not incompatible with modern medicine) and a large medical system such as Kaiser Permanente or NHS.&lt;p&gt;The economic benefits of the larger-scale system are obvious, and are directly measured, but the economic detriment due to increased transaction costs (derived from decreased trust) are neither obvious nor readily measurable.&lt;p&gt;Upsides of systems at scale can still outweigh downsides, and often do, but I suspect many industrial systems have a maximum scale above which efficiency gains lose out to, in this author&amp;#x27;s framing, transaction costs.&lt;p&gt;This abuts certain natural &amp;quot;borders&amp;quot; for system growth, such as national (or in the case of EU, common market) boundaries.</text></item></parent_chain><comment><author>jrumbut</author><text>This is why I&amp;#x27;ve never much loved blockchain on a conceptual level.&lt;p&gt;Even if you can make existing transactions trustless, you need more and more new transactions to negotiate the boundary between the physical world and the data on the blockchain.</text></comment>