This is likely to evolve into a couple different articles.
One thing that often gets overlooked in the Age of Abundance is money. This is a topic that, in my view, is completely misunderstood. We are in the digital era. Money took on this form decades ago. The percentage of transactions that is settled using physical cash is miniscule. Today, we operate predominately using commercial bank money. Central bank money is pretty much a thing of the past.
Actually, a case could be made this was a process that started 80 years ago. The central bank system was obsolete post World War 2. Globalization meant that an updated system was required.
This means that off-shore dollar money actually dwarfed the central bank money by the 1970s.
We are looking at the next technological phase of money: crypto. This is, once again, altering the money on top of the monetary system. Basically, we are looking at a realm where the control of both the ledger and communication system is changing.
It is a situation that is bringing a lot more entrants into the game. Since we are dealing with the digital realm, we are operating under those laws. That means the Laws of Information Technology now apply to money.
The Abundance of Money
People are ingrained with the scarcity mindset. This is something that our entire economy is based upon.
The fear is always there will not be enough. It is a concept that has, in many areas, been obliterated over the last 40 yeras. Things that are open and digitized reach a state of abundance.
Just look at these areas:
- photography
- information
- music
- videos
- communications
What is common? There was, at one time, a degree of scarcity. Today, due to digitization, they are all in abundance.
As stated, most currencies are digital. The challenge is that money creation was limited to banks. It was a controlled system. Their ledgers are not open. We see how the money supply is their domain, providing them exclusive rights over this operation.
Crypto changes all of this. Through the combination of currency along with assets, we see the ability to completely erect a new financial system.
Tokenization is getting a lot of attention and for good reason. When we look at value capture tokens, we can see a host of opportunities to monetize that which is overlooked. For example, social tokens have the ability to financialize fandom or communities. The value creation offers huge potential when it comes to the wealth generation across the world.
More Money Is Needed
When we look at the numbers being thrown around, we are moving into the trillions. Over the last few months, we saw commitments to data centers offered up in the increment of hundreds of billions of dollars. $300B here, $500B there. The total is trillions of dollars.
There is a reason for this.
Some will say that we are looking at the decline in the value of the US dollar. When it comes to the Laws of IT, the dollar is appreciating. Technology is deflationary. Focusing upon compute, the cost per performance keeps declining. That means the same dollar, over time, buys more compute. This is one of the reason why standards of living keep increasing.
In spite of those deflationary forces, we are looking at ever increasing numbers.
Sam Altman stunned the technology (and financial) world when he said he needed $7 trillion in chips . Yet, 15 months after he made that statement, it doesn't sound so preposterous.
Crypto = Networks
The challenge with technological deflation is where the benefits are realized.
Naturally, we can see why we have over 3 trillion photos taken each year. The fact they are basically free to not only take but distribute has brought billions into the realm. We cannot deny that zero cost has benefited individuals all over the world.
What about the financial aspects?
Here is where things get cloudy. The opportunities for photographers has diminished some. That said, the main beneficiary are the networks (or platforms). In this instance, Instagram, Facebook, and X are the financial winners.
These networks are gaining from the abundance of photos. The same is true for video, which we add YouTube to the mix. For the shareholders of those companies, it is extremely profitable.
Hence we have a situation where users benefit greatly but not in the financial sense. That goes to the network or platform owners.
Crypto networks are different. Anyone can be involved. The same is true for application. Tokenization distributes the financial rewards. At the same time, incentivization can be built into the system.
The internet is moving towards one where there will be an abundance of networks. Web 2.0 saw a siloes form. This is not the case with Web 3.0. Blockchain provides a completely different structure, one that is open and can be decentralized.
To build out requires money. Fortunately, due to the deflationary forces of IT, it gets less with each passing year.
Nevertheless, due to the growing need, more money is required.
Crypto is the only thing that can keep up.