Blockchain as an emerging economy
“All money is a matter of belief..” Adam Smith
In twelve weeks’ time, The Wealth of Nations will be 242 years old. It has acted as a precursor to the modern academic discipline of economics and has been used, cited and implemented by economists, technologists and political leaders. In this time, we have seen the rise and fall of economic markets, political ideologies, the convergence of a single currency, and now we witness the emergence of digital currency and Blockchain Technology.
Digital economy superpowers
When it comes to technology, and in particular digital technology, China and the United States seem set to dominate. They continue to fund basic research and reap significant benefits when the resulting innovations commercialise. These two countries are home to various platforms for economic and social interaction which benefit from network effects. Such effects include the instrumental influence on the closure of informational gaps. Perhaps most important of these, artificial-intelligence capabilities and applications that use, and generate, massive sets of valuable data.
The catalyst of the day
So, enter Blockchain technology, a system designed to distribute the centralised management of data. The technology that supports Bitcoin, Ethereum and other cryptocurrencies and are now being used to decentralise an array of industries. Even at its nascent state, Blockchain technology certainly has the potential to effect change in developing economies and emerging markets.
With the right convergence, Blockchain technology will create decentralised market-based economies, where products and services get produced and exchanged according to demand and supply. These transactions will be made possible using the supported cryptocurrencies accepted within the individual protocol network.
Primarily a social domain at the tertiary stage, it will also have established processes in place that determine the nature of transactions between platform participants and the cryptocurrency value. The effect of this one might ask? Economies of scale, or more importantly, economies that scale.
A digital ecosystem
Within such networks, there may reside many participants on various platforms ranging from investors, Blockchain users and an array of service providers. The causality is interesting. Value grows when the volume of interactions grows, so Blockchain economies must be designed to follow the pattern of stimulating investment and reward transacting participants. Blockchain is a new and innovative way for people to interact, and this includes economic relations. Such structures should include a network of organisations like suppliers, distributors, customers, competitors, government agencies and so forth.
Each microcosm within these structures will be involved in the delivery and deployment of a specific product or service through both competition and cooperation. It is a significant development that will allow for the removal of a traditional dependence, and frustration, with the inefficiencies of today’s larger centralised systems.
And so, to the question of Interoperability and Blockchains ability to form standards that enhance communication and transaction. Well…. let us just say that Adam Smith would be proud.
