People and Data by Redman Thomas C.;

Author:Redman, Thomas C.;
Language: eng
Format: epub
Publisher: Kogan Page, Limited
Published: 2023-05-23T20:37:04+00:00

Exploit asymmetries and/or close them (finance professionals and strategists)

To illustrate the main idea, consider pricing, a subject that has been top-of-mind for both buyers and sellers since time immemorial. In any transaction, the side that knows the most has an advantage. Thus, a used-car dealer, who sees thousands of cars every year, simply knows more and is in a better position to know the ‘fair price’. Since the buyer doesn’t, the seller can inflate the prices at which they offer to sell the car, to their advantage. Online sales amplify this asymmetry, particularly if the seller can infer something about willingness to pay from the prospect’s online searches.

The converse strategy is to close asymmetries. Consumer Reports is a classic example. Today, ‘fact-checkers’ serve incredibly important roles in keeping politicians and other public figures honest.

Unfortunately, in many cases, price checkers are not available. Any buyers, most of them anyway, do not wish to set themselves up as easy prey. They discount the seller’s claims, effectively reducing the price they are willing to pay and reducing the value of the item for sale. So, closing the asymmetry is in everyone’s interest. Here blockchain can help. For digital art, a Non-Fungible Token (NFT) can close much of the asymmetry associated with the provenance of the piece. In commercial real estate, locking every tax re-evaluation, every repair, every inspection, etc, into a blockchain as those events occur can do much to close the asymmetry. As Patrick O’Meara, CEO at Inveniam explained, ‘There is a lot of commercial real estate out there. If a blockchain can increase the value of properties by even a few per cent, it would be a boon for investors.’13

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