12. April, 2018

On the evolution of digital economies

Following the release of our technical whitepaper, we felt now was the time to follow-up on some of the economic thinking that also supports our vision. After all, distributed ledger projects aren’t simply technology driven, they’re also economies in their own right. Therefore, the fusion of the two disciplines is critically important in the design of any decentralised system. We’re fortunate to have the support of Dr Melvyn Weeks whose expertise is in applied microeconomics at University of Cambridge.

Dr Weeks recently prepared a whitepaper ‘The Evolution and Design of Digital Economies focused on understanding the evolution and requirements of marketplaces that are emerging in digital economies. We’re pleased to share this substantial work with the community for thoughts, comments and feedback.

To summarise very briefly, Dr Weeks’ paper examines the tools needed for marketplaces for digital economies and the origins and driving forces behind their adoption. Using classical economic models, the paper seeks to understand the nature of firm boundaries and the organisation of economic activity. Drawing on core economic principles such as: the principal-agent problem, bounded rationality, information asymmetry and trust relations, Dr Weeks examines the relative costs of transacting within firms and markets.

Central to the analysis is the ability for distributed ledger technology to reduce the costs associated with digital economic transactions and to provide products and services in a more timely manner, and in so doing to allow new markets to emerge. This has absolutely been the focus of our efforts here at Fetch. By creating an environment where Autonomous Economic Agents can act on behalf of people, machines or themselves to exchange value with other AI powered agents, underpinned by a smart high-performance ledger, we’re opening the doors to a wide range of new and emerging economic activity.

Professor Hal Varian, the Chief Economist of Google exemplifies ‘combinatorial innovation’ as the uniqueness when the component parts of these technologies can be combined and recombined by innovators to create new devices and applications.

Or in Dr Weeks’ words: “The uniqueness of the Fetch protocol and a particular source of value, is the way in which the specific tools of blockchain technology are integrated within a unifying framework. In reducing both the cost of transaction and contract costs, and decreasing delivery time, Fetch is able to serve new and emerging markets, based on granularity and where a key attribute of a service is the immediacy of the delivery time.”

The paper concludes by stating that “platforms that succeed will need to add value beyond simple matching of buyers and sellers, and the ability to execute smart contracts.” We couldn’t agree more. With Fetch, we seek to go far beyond simple matching by incorporating AI & ML that results in a ‘collective super intelligence’, one which benefits all Autonomous Agents in the system to provide the correlational and contextual insights they need to identify value exchange opportunities. Oh, and we’ve thrown a reputation system, embedded smart contracts, token and a pretty special distributed ledger in for good measure too.

We hope it helps explain the wider context within which Fetch has been created. Comments most welcome.

Oh, and I should mention, we’re looking to hire a Computational Economist, (job posting will be published soon) to drive forward on these concepts. If this sounds like you, please contact us via [email protected].

Fetch.AI
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Cowley Road,
Cambridge, UK

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