The digital path: smart contracts and the Third World

Abstract

Hernando de Soto, in The Mystery of Capital (de Soto 2000), shows that the poor of the world have, in his terminology, assets vastly in excess of their capital. In one study, de Soto’s associates surveyed neighborhoods in various poor countries, assessing the value of buildings which were not formally titled. The extrapolated value of just the informally owned buildings in the Third World amounted to $9.3 trillion – more than half the combined value of all publicly traded US companies. In identifying a crucial mystery – the failure of these assets to serve as capital for their owners – de Soto has identified a great opportunity for economic betterment.