The future is beginning to emerge.
As I see it, the shift over the next 100 years will be to blockchain nations. This is the answer to the present system we are operating under, one which is seeing a great deal of strain for a variety of reasons.
We live in a world that was designed based upon the physical. Our governments are hundreds of years old, constructed long before we had electricity. While there was some adaption over the years, we can isolate many areas where the ability to transition simply is not there.
The era is one of instant communication. Time is collapsing as we are able to do more in less time. Digitization is a massive step forward in this process.
So why do I think blockchain nations are the future? This is what will be answered in this article.
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Blockchain Nations As The Foundation
Our governments simply do not work. This is something that is true regardless of how it is structured.
Why is this?
Here is where we encounter a glaring inability to transform into the digital era.
As stated, everything pertaining to government is based on the physical. We mention areas such as Washington or Ottawa. Voting is based upon where one resides. Economies are categorized by countries. The legislative process is slow and archaic.
Ultimately, this is doomed to fail.
It is not too early to state we are in a digital world now. Many in cryptocurrency, or Web 3.0, discuss the "tokenization of everything". This means we are looking at the digitization of, well, everything.
If everything is tokenized, then it exists in digital form. That puts it in the world of bits as opposed to atoms. This is where speed becomes the main barometer.
Networks will be abundant. That means we are either faced with a digital world that is siloed, such as what Facebook, Google, and Amazon constructed, or we will have decentralized networks that are the basis for society going forward.
The reality is, the only way for network abundance, is through blockchain. Centralized entities simply are not enough in number to multiple at a rate to achieve abundance. Open source networks can be forked in an instant. Here is where the replication begins.
Naturally, this will not be the only form of networks. It will, however, comprise a great deal of economic activity.
Overwhelming Network Effects
The digital world is known for its network effects. This is now, however, exclusive to this realm. For example, it is present in the financial and economic realms. The difference is the word used is compounding.
With blockchain, both of these can occur at the same time.
Consider the idea of an economy. With blockchain, there is value capture through the L1 coin. This allows for individuals to own the digital real estate. The value of this is enhanced by what is built upon it.
Market activity is often disconnected from value but, over time, it eventually catches up. This kicks things off in the sense that rising coin price tends to attract others.
When this happens, liquidity enters which allows for the funding of the development for more applications. These are the "businesses" of the blockchain nation.
As the number of businesses grow, we then see the attraction of more real users, furthering the network effect. When this occurs, there is more demand for the coin, which helps to push the price up. This starts the cycle of more liquidity.
Of course, since this is a circular system, there is no starting point. I wrote it our in a sequential fashion but it is really a circle. We could start with the development of more applications and work through the process from there.
Nations have limitation regarding growth.
The greatest driver, throughout history was population. This could come in the form of number of people along with the education level. As these increased, the potential for economic output saw a similar move. This was not guaranteed as obstacles such as availability of resources, rule of law, and access to capital cropped up.
It was also compounded by technology. This, naturally, was driven by the population situation. Countries compensated by using technology developed by others, something that enriched the producers.
The point here is that, for the most part, the growth rate was slow. This is not the case with digital networks. Whereas nations look at a few percent growth, digital platforms can keep expanding much larger percentages. It is something that can carry on for decades.
Where The Money Flows
It is estimated that roughly 7% of the United States economy is made up of software. This number jumps to roughly 30% when we consider the economic productivity tied to it.
While that numbers might be off, it does show how digitization (and computerization) is taking over. This leads to the question of what will be the foundation of the digital world?
The answer to this is derived by simply following the money. Where is the value going to be generated? If we see massive growth rates in the economies of blockchain nations, this is going to capture more people. Again, look at the network effect cycle of these systems.
Now take that with a 70%, 100%, or 150% annualized growth rate. Consider how much attention that will garner especially since there is an asset, the value capture token, designed to reflect what is taking place.
This is a massive concept, one which we will address in future articles. The idea will become more evident as blockchain systems evolve and expand. They are still in their embryotic state.