Cryptocurrency Will Be One Of The Biggest Stories In The 2020s
There is a lot going on with technology. This decade is going to be one where, when we look back, we will say that life was not the same as it was in 2020.
By stating this, it is not referencing the COVID situation, or even the push for greater government control. Instead, we are referring to the technological changes that are already underway.
We are going to see some major industries completely upended. One at the forefront is the financial services industry. This is one of the larger ones in the United States, accounting for a significant percentage of the overall GDP.
Financial markets in the United States are the largest and most liquid in the world. In 2018, finance and insurance represented 7.4 percent (or $1.5 trillion) of U.S. gross domestic product.
Bitcoin is capturing a lot of attention at the moment. This is due to the price run. Obviously, Wall Street is getting on board with the leading cryptocurrency. But why is that?
One of the reasons is we are seeing Bitcoin positioned as a store of value. These entities believe that this currency will end up being used for reserves by many institutions. There is already talk about some banks holding Bitcoin as reserve. It is only a matter of time before we heard rumblings about governments getting involved.
There is no way to deny that money is at the core of our society. It is a part of most everything we do. For the time being, until we somehow move towards a post monetary world, money will still be central to all that makes society function.
However, central is no more. Since the introduction of Bitcoin, the monopoly that nations held over the creation of money was expunged. Now, we see the ability to generate a currency in the hands of most anyone with an Internet connection. While it is still a bit technical, that will get easier over time.
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What happens when we are in a world where creating one's own currency is easier than putting up a website?
All of this is leading to massive innovation. This creates a feedback loop that only accelerates things. In the stock market, innovative companies are always rewarded with higher stock prices. Many contest the value of said companies but, in the end, money flows into them. Innovation is the engine of growth.
We can expect to see the same thing in cryptocurrency. Since it is a technology, constant innovation is taking place. We are seeing new ideas being tested on a regular basis. Those platforms that spark innovation are going to get handsomely rewarded. Markets simply cannot resist being involved where that is taking place. The risk of missing out on big opportunities is too great.
The same could be said for the entire industry. Since it is often difficult to see what is happening within one circle of development, when we step back and treat the entire situation as one, we see that a ton of innovation is happening. This will only continue as we move towards interoperability.
A benefit to all this is things go parabolic when stacking of technologies is involved. Obviously, combining cryptocurrency with automation (AI) will lead to a host of possibilities. At the same time, we can see how a crypto payment system tied to Internet of Things (IoT) makes perfect sense. It is much easier for an autonomous taxi to accept and make payments in crypto. This could be designed for the network to be utilized for marketing/customer retention.
Ownership is becoming a heavily discussed topic. This is naturally focusing upon data yet it extends to much more. During COVID-19, the world's wealthiest saw their net worth moon. While much of the world suffered, they got richer. The reason for this is because of their ownership stake.
It is a time proven fact that the key to wealth is ownership of production. Regardless of what form that comes in, those who own assets end up getting wealthier. Sadly, those without, do not.
This is the essence of our income and wealth gap. Those who do the owning are benefitting greater than everyone else. Unfortunately, participation is closed for most. Even those with some means are not involved in the very early stage deals. We get to participate when something goes public, a time when big money was already made.
Cryptocurrency and decentralization changes all that. Wall Street exclusivity is being challenged. Now, anyone has the right to buy whatever products are out there. If one wants to enter the derivatives market, something very small thus far in crypto, that will be available. When decentralized exchanges start carrying those types of assets, anyone can buy.
Of course, there is a risk of entering those waters so people are going to have to start taking responsibility for their actions. There are bad actors everywhere, including Wall Street.
Essentially, cryptocurrency is going to change the distribution of capital around the world. People are going to have options through crypto that is not available to them now.
In technology, we discuss the network effect. This is where a network system grows in value based upon the number of nodes it has. A simple way to think about it is "users". Naturally, the more users, the greater the value.
What is interesting is that this applies to anything that we value. People choose what something is worth. As more people believe in that particular asset, then it tends to go up in price.
Right now, crypto is not valued anywhere near the present system. The reason is obvious: very few people involved. The USD continues to be valued around the world because the overwhelming percentage of transactions take place in this currency. If that changes, we can expect to see the desire for dollars diminish greatly.
When we couple the network effect with innovation, and pair that with the underlying basis for much of society, we see how big this can become. Since the base technology is blockchain, we can see the technological move towards decentralization as tying into this.
As we start to consider the metaverse and virtual layers that are seemingly infinite, cash or fiat does not really apply. These lack the programmable qualities that are necessary for newer levels of innovation. Cryptocurrency does not.
In the end, the idea of having to deal with bureaucrats and regulators is going to be even more unappealing than today. Why would a developer opt for a currency that is under this scrutiny when he or she simply can use one that is not (or make one)?
Bitcoin introduced something that has not been seen in hundreds, if not more, of years. Our monetary system was shaped in the physical world. That is its realm. Today, however, we are in the digital age and rapidly progressing towards the virtual. This is not going to co-exist with the present monetary system.
A prime example is banking. The largest banks in the world have a major portion of their assets tied up in physical branches. That was the barometer that was used to judge which banks had the most power. Number of locations coupled with some of the most expensive buildings in a major city is what told the story.
Now, a "bank" is on a smartphone through an application. There is no need for a physical location. What go through the expense.
Society is going to see a technological boom. This has not happened over the last 20 years where much of life was altered. Many claim that life is not that much different today than it was in the year 2000. That is true to a large degree.
However, one did not stand in 2000 and say that life did not change much since 1980. From a societal standpoint, much of life, both work and leisure was altered over those 20 years.
This is the cycle that technology goes through. Today, we are on the verge of seeing automation, cryptocurrency, AR/VR, renewable energy, and gene editing as technologies that are going to alter major aspects of life. Augmented Reality, for example, is going to affect almost every industry that is out there.
The same is true for cryptocurrency. As more nodes become connected, crypto networks are going to play an increasing role in the world over the next couple decades.
Many term it Web 3.0 or Industrial Revolution 4.0. Whatever we call it, crypto is going to be along for the ride.
For those who are involved early, they have a head start on the rest of the world.
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