Perhaps it is time that people start to truly understand how big this is going to get.
In short, the virtual economy is going to be much bigger than the existing one. The "GDP" of the former is going to be many orders of magnitude larger than what we have now. This is something that people truly need to internalize.
We are operating in the digital world. This is near-limitless in what can be done. Restricted mostly by bandwidth and processing power, both which are expanding every year, we can see how this is a near-infinite state.
That means all activity that is generated has the potential to be considered production. With Cryptocurrency, we have the ability to capture that.
Punks On Hive
We recently got an example of how things operate with the project Punks on Hive. Some were astounded that something could generate so much money in such a short period of time. Welcome to the virtual realm.
Here is an example of where $160,000 was generated in around 36 hours. If we use the current price, this is over $200,000. Naturally, a lot more time went into the project than just the "Selling" period but it does show how quickly things can move.
Now consider this in the physical realm. How long would it take to generate $200K in sales? Also, what is the cost of goods sold associated with that revenue? With Punks on Hive, there is no cost to the actual product. The time invested coding everything along with some server space is all that is required.
These assets were created out of thin air. Some might say there is no intrinsic value to them and they would be correct. However, we should know by now that no intrinsic value does not mean valueless. After all, what intrinsic value does a painting have? Aside from some canvas and a bit of paint, what is someone paying for truly? Yet we see pieces of art going for, at times, hundreds of millions of dollars.
Ultimately, it is a lot quicker to create a NFT than it is a painting. Of course, we can even generate tokens that are associated with the piece of art. In other words, we can take the entire physical world and put together a digital representation of it.
For this reason alone we can see how much larger the virtual economy will be compared to the real one.
Speed
The biggest advantage the digital world has is speed. We saw a number of aspects of life converted from physical-to-digital over the last couple decades. We no longer write out and mail correspondence. Email is the preferred method in this instance. Of course, for a lot of interaction, that is too slow, thus instant messenger are used.
When you have an entire realm that is built upon accelerating speed capabilities, the potential grows enormously. At the same time, due to increasing bandwidth, more can be done by a larger number of people. The latest stats tell us there are more than 5 billion people online. These are all going to be part of the virtual economy in the near future.
With something growing so rapidly, and low costs to entry, we can see how the pace of economic impact is only going to increase. More projects results in a wider range of options. Couple this with automation and the numbers get really big.
Elon Musk talks about how scaling production in manufacturing is hard. He is right about that. The same thing could be said for expanding construction operations. A lot is required in terms of capital, labor, equipment, and time.
That is not the case in the digital world. The ability to scale can take place in a fraction of the time. Sure, it takes a certain period for the code to be set down. However, as more open source software is out there, this because condensed also.
The laws of physics become a barrier when dealing in the physical world. Look at the advancement, or lack thereof, of robots. Here we gain insight into how difficult it is to deal in this arena. Automation in the digital world is much easier. Once the software is written, it can take over. Also, things such as dexterity and the ability to grasp things with the proper pressure are not present. This only adds to the speed which things operate.
Tremendous Amounts Of Money
When we couple the speed of the digital world along with its ever increasing size, we understand the potential here is enormous. This is a situation we already see as evidenced by the most valuable publicly traded companies.
Is anyone surprised that the most valuable companies in the world, for the most part, are technology related. Many of them have direct operations tied to the Internet. They are either utilizing the digital realm or providing the ability to engage with it. Either way, it is very profitable.
This is still Web 2.0 stuff. We know things get really exciting when the idea of Web 3.0 is explored. Here again, we see the economic impact that is on a scale we rarely considered.
When this gets rolled out, individual platforms will have economies that are larger than many nations. The key is there will be more than a few like that. Ultimately, we are going to have many ecosystems that do trillions of dollars in activity.
Web 3.0 makes everyone a producer. This feeds directly into the economic activity of the ecosystem.
Automation is going to mean trillions of transactions daily on top of what we already see in the global economy. New mechanisms of funding and collateralization are being developed. This will help to feed into the ability to access capital, a move which is done with the intention of generating even greater economic output.
Bitcoin, in the minds of most, is going to exceed the market cap of gold. Serving as digital gold this makes sense since, even solely as a store of value, Bitcoin costs less to house, is easier to transport, and can be sold (and delivered) in a short period of time to anyone in the world.
Thus, if we take the same mindset to the art world, this is what we see. At present, this is the global value of that industry.
The number of $50 billion will be easily exceeded down the road. Think of the digital art that is being created. All of this is going to push the number of transactions far beyond the 34 million. In fact, it will get into the billions.
Obviously, the value per piece is going to be much lower than in the physical world. That is fine. What is vital is the totality of the economic activity. The size of the market for digital art is going to be orders of magnitude higher than the physical one. Certainly there will be "pieces" that go for millions of dollars. However, someone can get involved by spending a few dollars buying a piece of a NFT platform.
The inclusiveness means we are going to see a market worth many times the value of the physical one.
Spread this idea across many industries. What is the potential of eSports compared to physical sports leagues? The later is enormous followings but is limited in the number of teams that can exist globally. With eSports, we could see millions of leagues set up.
Take this same approach to real estate. We are aware that virtual real estate is going to be a tremendous opportunity down the road. What is the limit on that? There really is not one.
We can keep this process going for many different industries. As more is digitized and placed in the virtual world, the potential expands greatly.
Of course, we have to keep in mind, at the core of all this, is data. And that is something that only grows in value with each passing year, in spite of the fact that the amount doubles each year.
Therefore, get ready. The numbers tied to the virtual economy are going to be enormous.
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