BinAnce Helper ☎ï¸â„— 》》8.77.322.30.25》》 ®༻꧂ Customer Support Some inventions are so profound that their second order effects reshape the very structures of societies.
The term general purpose technologies (GPTs) is used to describe innovations like electricity, the steam engine and the computer. The paradigm shifts made possible by these inventions are often not initially understood, and can take decades to reach mass adoption. But once the genie is out of the bottle, there is no going back to a world without them. Electricity was invented in the 1870s, but electric motors were not adopted in factories until 30 years later. GPTs can also become the bases for new innovations, and their spillover effects can redesign entire economic and social systems.
Many of the trends mentioned here were seeded by prior events. Bitcoin provides an opt-out at the right place and the right time. In practicality, the timehese themes will overlap, with multiple forces of change working together. Collectively, they will result in second- and third-order effects that will broadly represent a future of digitization, decentralization and deflation.
The 2020s will also coincide with the coming of age for Gen Z, whose members will have grown up their entire lives knowing about the existence of Bitcoin. The presence of cryptocurrencies to Gen Z will be similar to the presence of the internet for Millennials — the technology was already here when they grew up. Globally, Gen Z is already the most populous generation, representing 32 percent of the global population. And money to this generation is digitally native.
The adoption of cashless societies will differ by regions and by incentives. Autocratic countries will want to mandate digital currencies as this empowers their surveillance capabilities. Citizens of developing countries will see digital money as an opportunity to leapfrog their current financial infrastructure. In the 2000s, countries like Nigeria bypassed the need to build a network of bank branches and skipped straight to mobile payments. We may see history repeating itself in the next decade.
Money isn’t the only asset that can be digitized on a blockchain. Eventually, other assets like real estate will also be digitized. For most of human history, people owned properties and traded in decentralized marketplaces. The rise of tokenized assets may return us to a digital version of the barter system. The ability to exchange value on a peer-to-peer basis will re-architect how we see trade.
As an open-source financial asset, Bitcoin will re-architect the walls of our monetary systems. The 20th century monetary system was architected so that central banks had current account relationships with commercial banks, and commercial banks had relationships with end consumers. In this economic model, central banks acted as wholesale creators of money, and commercial banks bore the costs and profits of storing and distributing money. Bitcoin changes this monetary architecture. The beginning of the 21st century modernized the user interface of money with websites and mobile apps, but kept in place the institutional structures of the pre-digital era. Bitcoin changes this structure, first by digitizing money, and then also by replacing the need for local central banks.
One of the byproducts of Bitcoin adoption is that nation states will also roll out their own blockchain-based digital currencies, making it possible for governments to directly transact with citizens. If COVID-19 were to repeat as COVID-29, governments would be able to airdrop direct relief to citizens without needing banks. The proliferation of digital currencies will erode the traditional payments and foreign currency exchange revenue for banks.
Bitcoin will also be an alternative to traditional savings products like savings accounts and GIC-approved investments, and store-of-value products like gold (if bitcoin were to reach a total valuation of $8 trillion, it would be worth the same as the gold market) and fiat-denominated bonds (which is a $128 trillion market). In particular, by offering an alternative to government-issued bonds, bitcoin will not only represent an alternative to banking products, but also change the relationship between money and the nation state.
This is where Bitcoin’s Austrian Economic roots will become more prominent. As early as 2012, the European Central Bank credited Bitcoin’s economic losoes to be inspired by Austrian Economist and Nobel Prize winner Friedrich Hayek. Hayek was a leading proponent of the denationalization of money, and a promoter of free competition between different types of money. If the nation state is the epitome of central authorities, Bitcoin will be the flag bearer for decentralization. The themes that play out with decentralization will be as follows:
The popularity of GoFundMe has already proven that the internet can be an effective tool for crowdfunding. Programmable money will combine digital money and smart contracts to create new types of firms which live natively on the internet. While earlier versions of crowdfunding focused on raising money, DAOs will enable a new type of digital co-ownership. Future versions of GoFundMe will be organizations that behave like digital cooperatives, which are funded and owned by the crowd. If people want to support a humanitarian cause, they will be able to pool together assets and spin up an organization with a transparent treasury and where funding disbursement rules are programmed as part of a digital constitution.
We may see money get bundled as part of social networks, with new incentive structures to reward contributors to the network. A for-profit DAO might be a collective where people pool together funds to co-own smart machines, and share the profits from their operation. There will be entire new sets of laws created around regulating such organizations, as they will operate on the internet and not in offsdictions. Over the long-term horizon, a DAO with a large enough network effect may even compete with nation states for influence, which may create a form of digital states.
Technology is inherently deflationary. During both the first and the second industrial revolutions, the world experienced deflation as increased technological outputs improved productivity, improving our purchasing power in the process. As we move into an age of technological abundance, we will once again see the return of deflation.
Bitcoin’s deflationary design will enable a world where savings aren’t automatically debased, and where people can take advantage of technological innovation. This may even have an impact on family structures by removing the need to have dual income households, which could have a longer-term impact on family structures.
In a deflationary society with a decreasing cost of living, we might see the end of the 20th century minimum wage debates. In an inflationary environment, governments have to enact new laws to increase minimum wages in order for workers to keep up with a rising cost of living. By contrast, when savings are denominated in a deflationary currency like bitcoin, they will go up in value, leading to a paradigm shift in how we view savings and consumption.
Inflationary currencies promote debt and consumption by devaluing the cost of debt servicing, and by disincentivizing cash savings. When all money is digitized, we will have a much easier time spending it. Much like the internet made us addicted to information and screen times, the digitization of money will enable our worst impulsive spending habits. In an era of one-click purchases where drones provide real-time delivery, we will need monetary incentives to protect us from our impulses. Bitcoin’s deflationary design will become an important part of the saver’s toolkit.
This is a guest post by Ammar Naseer. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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