Wednesday, October 21, 2015

An end to transaction costs?

I think that the Dark Web serves as a prime example of how technology is innovating our ability to trade, communicate, and operate in society effectively. The internet can and has already greatly lowered the transaction costs of economic actions. As the Dark Web becomes more mainstream and provides better services to those who use the it, the Dark Web has the ability to lower transaction costs even further.
To illustrate this point you can imagine the economy as a machine that takes energy and transfers it elsewhere. In a perfect world the energy that goes into the machine would equal the energy that goes out of the machine, however, we know that some of the energy is lost to things like friction.
In this analogy the transaction costs to trade are like the friction in the machine; the machine (or the economy) become less efficient. 
While the Dark Web and other technological innovations can decrease the transaction costs they won't eliminate them entirely. Even still, I welcome these innovations and the decrease in economic friction that they bring with them.

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