Re: Wall Observer BTC/USD - Bitcoin price movement tracking & discussion
Laws and contracts are useless if there is no third party with power to enforce them and settle disputes.
That's not entirely true. Two parties may resolve a dispute themselves. IF they believe that it is less costly than a physical confrontation.
But in that case the laws and contracts are useless, because the dispute will be decided by the expected costs and benefits of each action (e.g., the party with the machine guns gets his way), and not by any laws or contracts.
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Anarcho-capitalists also theorize that third party mediators will offer their services in dispute resolution based on commonly-accepted community norms. If Both parties can agree on a third party Dispute Resolution Organization, then they would also have to agree on mechanisms for enforcing the outcome.
Today I learned a new name for "government": "Dispute Resolution Organization".
I suppose that the difference is that there will be several DROs that the parties can choose from. But suppose that they both agree on DRO A when they sign te contract, but when the dispute arises one party asks his buddies from DRO B to persuade the other party, while the latter brings his nuke-launching Abrams tank out of the cellar...
Those multiple DROs sound very much like big city gangs...
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War is expensive. Throughout history, you will find that it is mostly engaged in by parties that do not bear the full cost. We propose that any parties engaging in physical conflict bear the full cost of doing so, thereby discouraging the practice.
That would be wonderful! But does anyone have any idea on how we can get that rule to apply?
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Reputation also has an economic and social value. Credit scores are one example. Other members of the community can enforce laws and contracts even if they are not a direct party by imposing opportunity costs on violators. An example: you defaulted on a loan, so most others will refuse to lend to you in the future, and if they do it will be at a much higher interest rate. or another: You punch somebody in the nose and word gets out so you are no longer welcome at certain social events.
Well, I think that bitcoin will in the future be a textbook example of (among other things) why loss of reputation is hardly an effective deterrent. See Josh Garza, Patrick Strateman, Zhou Tong, ... While a scammer or defaulter may lose a fraction of his market, there will always be whose who take his side. Why, even Danny "Neo&Bee" Brewster seems to still have friends in the community...
And, according to the P. T. Barnum Law, there is a sucker born every 12 seconds...