Cryptocurrency is garnering a lot of attention. For most, it is simply nothing more than another asset to speculate upon. Much of the discussion centers around price and green candles.
Wall Street is now in the game, starting to create what will likely be a long line of products stacked on top of cryptocurrency. Bitcoin is the first but we already see them lining up to do something similar with Ethereum.
That said, there are some things regarding this discussion that are important. Cryptocurrency is actually following a long trend pertaining to this Internet. We saw this story on a number of occasions and, fortunately, we know the outcome.
For this reason, looking into it is helpful.
The Lesson From The Internet
What are the lessons from the Internet?
In other words, what happens when it shows up in an industry? Here is where studying some of the basics of what took place in the past is helpful.
We also have the advantage that this is not a singular event. It happened a number of times, in different industries. Yet, the results are always the same.
Therefore, we are going to focus upon these lessons and apply them to cryptocurrency.
So what are we to learn? It is rather simple. When the Internet shows up in a new industry, two things happen:
- whatever is there gets obliterated
- abundance is created
This is a massive force of disruption. No matter what we look at, these two factors are always in play.
Over the last 30 years, we saw the same story in these areas:
We can even add photography to the mix, although that was not based solely on the Internet. Instead, that was more the digitization of the products leading to a massive explosion in the number of pictures.
Nevertheless, concentrating upon the 5 industries mentioned, do we see the patterns. There is little doubt that destruction took place with many companies (divisions) being eliminated. At the same time, we have abundance in every area.
Let us take shopping.
The retail apocalypse was brought on by online shopping (primarily Amazon). Shopping malls in developed countries are all taking a thrashing. We also have people sitting on their sofas with the ability to shop at thousands of "stores" without leaving the house.
This is a pattern that keeps repeating itself.
Now, the Internet came to money.
Cryptocurrency
In the past I stated that cryptocurrency is going to be worth quadrillions.
Many take exception to this, believing it unachievable. However, if we follow the progression of wealth generation, we see how this is actually in alignment with also takes place.
There was a time when billions was considered a large denomination. Now we are dealing in trillions. What comes next? Quadrillions.
Here is another way of looking at it:
As we know it, what is the Internet worth? Of course, this is a ballpark guess because nobody can quantify it. Researchers tried to assess the value about a decade ago without much luck. I believe they came up with a number like $20T-$30T.
Whatever it was, it is just a guess and, likely, vastly understated especially for today. When we think of 5.5 billion people engaging in all kinds of activity, it is mind-boggling.
We are also witnessing the next phase of technological development with chatbots and other forms of AI. What is that worth? You will notice that it is not very useful without the Internet.
The point being is that tens of trillions in value was generated simply because of this medium.
Now we have it entering the world of money, the basic component of all economy output. There is no reason to believe the impact will not be at least a couple orders of magnitude larger than what the Internet created so far.
The lessons will apply to cryptocurrency: disruption and abundance.
Tokenization of Everything
We often see the tokenization of everything discussed.
There are hundreds of trillions in asset equity around the world. Then we have similar numbers in debt (an asset tothe debt holder). Yet, in spite of these massive numbers, there is a lot of activity (value) that is not captured.
How about the social layer any group or entity? That is missed under our present system. Without tokenization, the fanbase of football or "Breaking Bad" is overlooked. Even companies such as Tesla and Disney, both of which have equity and debt, fail to leverage the value of their "fans". Certainly they monetize through the sale of products or services. However, they miss what is generated by the loyalty outside of that.
Tokenization assigns a value based upon market conditions, something that can be transferred between different parties.
If everything is tokenized, then people are having their wallets expanded for whatever they opt to engage in. This naturally is enhanced when we consider automation and what that can do. Simply look at the concept of running infrastructure and how that can provide automated incomes for people.
Expand that over the entire spectrum of storage and computation that is required.
The truth is we honestly have no idea how large this will become. Just like the early adopters of the Internet did not really foresee what we have today, we are likely to be awry when we speculate what the Internet will be like in 30 years.
Here is one case in point:
Many talked about the metaverse. To have a fully immersive experience providing mobility, we are going to require massive advancement in edge computing. It is not likely that we will only want to experience this tied to a PC. That means people need to get the compute while sitting in the park.
One way to do this is to borrow it from others. When people have excess they could "rent" it. How would that be paid? Certainly not with cash or Visa. People will receive tokens for allowing others to access the compute. Of course, before we can even imagine this, security enhancement is required.
This is just one example of the potential that could be out there for people. Hell, one's coffee maker could become a money maker.
As more things become digitized, the lessons mentioned early cover a larger portion of our economy. Of course, when there is a massive shift, what captures the value of the new entities that form?
Up to this point, it is the same system with the equity state typically being Wall Street and associated shareholders.
Cryptocurrency changes this. Tokenization provided a new opportunity. This is certainly the next phase of evolution in the prosumer arena. It saw the consumers of content also become producers. Unfortunately, until tokenization, there was no equity offered to these people (even income was scarce).
This is all changing.
Over the next few decades, quadrillions in value is going to be generated. It will be captured through tokenization and people will be amazed at the abundance that starts flowing. They should not be since this par for the course when it comes to the Internet.
The lessons are clear.
And now the Internet has come to money.