Crypto-economics: A Brand New Economic System

6 Min Read
1176 words

Capitalism. Socialism. Communism.

We hear great debates today about what system should we adopt. All have downsides which were exploited over the years. Opponents of capitalism point out the income and wealth inequality as a reason why we need to move away from that system. Their view is socialism should be embraced since it is a "fairer" system. Of course, opponents to that will point out how the lack of growth makes it an impossible system to sustain, eventually pushing its way further out towards communism.

The problem with any of these ideologies is they are extremely flawed. What opponents say about them is accurate. This gets further convoluted by the fact that politicians get involved, and they are the same no matter what system we are looking at. Their agendas usually end up making whatever is going on even worse.

Ultimately, the majority of the people end up suffering for the ill-fates that inevitably happen. In an outright communist system, people end up starving as we saw a number of times throughout history. At the other end of the spectrum, we can see similar results although not as wide scale. Nevertheless, that one does have the advantage of moving more people out of poverty than any other system we constructed so far.

For this reason, it is time to develop another one to replace what is presently in place.


Source

Here is where we see crypto-economics entering as the solution. This is a recent concept that completely reverses everything we know about economic thought. Instead of depending upon scarcity, we now see a system that is not only built upon abundance; it actually creates it.

In short, it is the ideal system for the digital/virtual age.

Tokenization is a powerful concept that really is under-investigated at this point. Over the next decade, as digital assets grow, people are likely to realize how much different the world is becoming. This is far more complex than just a different form of money.

Actually, the monetary component of cryptocurrency might end up being what makes the smallest impact. We will see greater impact elsewhere.

The value of tokenization lies in the concept of fractional ownership. This is something we do not have a lot of experience with, especially on a small scale. However, we do have the track record with public companies, understanding how powerful they can become. Certainly, they have political clout that we will set aside for this discussion. However, we cannot dispute how stock ownership is a proven pathway to wealth creation.

There are some problems with the existing shareholder system. To start, it is still hierarchical, i.e. top-down. At the same time, it is part of a larger economic system that relies on the scarcity model. This caps what can take place.

Due to technology, we are seeing the ceilings raised if not completely eliminated. As we progress into the virtual realm, we will see how things will spread in a near-infinite capacity.

Crypto-economics exhibits one feature of digitization: abundance. Once something is digitized, it rapidly enters this realm. We saw it with information, music, video, and communication. Now we are seeing not only with money but all kinds of digital assets. This is going to affect everything.

Our present models simply are not constructed to deal with this. It is why a lot of what we know needs to be tossed out the window. Very little of that is applicable going forward.

Many ask what is backing all of this? What is often overlooked in the equation is data. This is something that most are aware has value today. However, it is only in the hands of a few people. Cryptocurrency is changing that. Through digital assets, we are seeing the foundation of an entirely new economic system being laid. This is the piece that many are missing when lookin at this equation.

The challenge many have is they are looking at thigs through too narrow a lens. For example, most look at cryptocurrency as a new asset class. That is not the case. Eventually, all assets will be crypto since they will be tokenized.

At the same time, digital assets are not just another asset class that is part of our present economic system. Instead, it is part of the development of something entirely new.

It is why some of the most knowledgeable economic and financial minds completely miss what is taking place. Their frame of reference is the existing system, which they know very well. Comprehending something this radically different is impossible. It goes against everything they believed for decades. Few can completely change their belief system in such a short period of time.


Source

All complex systems follow similar patterns. However, they can be influenced in different ways. The present evolution of crypto-economics is not mirroring anything that is akin to economics. Instead, it is following the path of communication systems.

This is another key area that is different. We are seeing a system that is based upon peer-to-peer communication. Any two nodes, anywhere in the world, can directly interact. This is pretty remarkable on its own. The idea that data can go direct from one node to another without approval from any 3rd party is very powerful.

What makes it revolutionary is that the data, itself, has monetary value. Hence, it does not have to be assigned a value or compiled and sold. Instead, the data sent between the two nodes has some type of agreed upon value, even between total strangers.

Think about things from this basic perspective. What we have is the foundation upon which crypto-economics is being built upon. Instead of a standard economy, we are seeing one that is networked. We got a glimpse of it with the progression of companies such as Facebook and Twitter. Now, we are seeing the potential spread through the entire economy.

As tokenization starts to swallow up more of the economy, we will see a shift at a higher system level. In complex systems, as lower levels evolve, the cumulative effect is the evolutionary step to the next stage.

In this instance, watch the evolution of the monetary, financial, social, and governance realms. These are a few areas that we will see progress which will result in an overall leap forward to the next economic phase.

Hopefully this provides a glimpse into how large the realm of crypto-economics is and how we are dealing with something much larger than just a new form of money. This is literally an entirely new economic system being constructed the eliminates most of what is existing today.

There will be fragments of it going forward just like there are still single-celled organisms on the Earth. However, the multi-celled ones were able to evolve much further than those primitive systems.

We are seeing the same thing taking place with economics. The evolution is starting to take place.


If you found this article informative, please give an upvote and rehive.

gif by @doze

screen_vision2025_1.png

logo by @st8z

Posted Using LeoFinance Beta