We are living in unprecedented times in every way imaginable, from financial markets to technological and cultural revolutions, the world is in a state of dramatic change. The geopolitical upheaval in Europe as well as in Asia has caused geopolitical disruption and a forming of a new global order. The current moment presents both exciting opportunities and extreme challenges. To that end, blockchain-based cryptonetworks are at the forefront of the current technological and financial revolution which I believe we are at the beginning stages of.
Smart contract cryptonetworks such as Ethereum and Solana to name a couple are groundbreaking for many reasons. The 3 properties that make blockchain-based cryptonetworks revolutionary are:
- Decentralized Payment System. At the heart of cryptonetworks is a sovereign independent payment system that could potentially rival the global SWIFT payment system.
- Autonomous smart contracts that can interact with customers and real-world scenarios.
- Programmable money
I will touch on each of the properties mentioned above as a base case of why blockchain-based cryptonetworks will soon be a ubiquitous technology. Cryptonetworks is a new and innovative way of “internetting”, and is the foundation of the Web3 movement.
Blockchain Cryptonetworks are Sovereign Independent Payment System
When Satoshi Nakamoto released the Bitcoin software and launched the network in January 2009, he or they didn’t just launch a digital currency but a new independent and alternative payment system that could run independent of government control. Payment systems are extremely important to governments around the world in controlling important levers to the monetary system of an economy as well as enforcing laws. Payment systems are also a national security concern for every country. If you are still not convinced, ask the Russian government when the United States and Western allies kicked Russia banks out of the SWIFT system last February for the invasion of Ukraine and essentially cut Russia off from the global economy. Blockchain enabled networks at its core are payment networks that uses a decentralized ledgers (e.g. the blockchain) to record the transactions between parties. Furthermore, citizens of a sanctioned countries or a countries with a poorly run government will have their domestic currency erode, making essential daily goods such as food and energy too expensive for many of its citizens. As a result, I see cryptonetworks and digital currencies as an important medium of exchange for global commerce especially in a period where globalization is diminishing.
Autonomous Smart Contracts
The breakthrough of Bitcoin in 2008 is a defining moment in technological history. However, the launch of Ethereum as the first smart contract blockchain network is a water-shed moment for the industry which helped people reimagine the internet. Ethereum allows developers to be able to code automated computer programs that interacted with people and kept a secure and immutable (e.g. tamper proof) record of the transaction. Smart contract cryptonetworks such as Ethereum allow for more efficiency in cost and time for developers. Blockchain networks are powerful because they will soon replace vital internet components such as API gateways, authentication systems and other computing services which have been traditionally centralized on platforms such as Amazon Web Services or AWS, MicroSoft Azure and Google Cloud. This can all be done in a cost efficient, secure and trustless manner via blockchain technologies.
Programmable Money
When I speak of programmable money, I am referring to the ability to implement monetary policy or in crypto parlance; the tokenomics that supports the overall economic health of the cryptonetwork. The tokenomics impact every aspect of a cryptonetwork. The tokenomics determine how miners/block producers are paid to secure the network. The tokenomics provides protocol developers/financial engineers ways to create healthy incentives to attract token holders, hence making the network more valuable through powerful network effects.
Now I know what you are thinking, did this guy say “healthy incentives”? In light of the recent debacles in the crypto industry with the likes of Luna and now the Celsius Network. However, just like the infamous Dot Com bubble and its eventual bust in the early 2000, crypto (unsurprisingly) will see many networks and companies go bankrupt. I suspect that we will see many more companies in the coming months close their doors. An important lesson from the Dot Com era, is that despite an overly speculative market filled with pozi companies, some of the most revolutionary companies of the 20th century such as Google, Paypal and Amazon came out of the Dot Com bubble. I believe the same will happen in the crypto space. Eventually markets will rebound. In the next crypto wave, perhaps we may see a crypto company replace one of the FANG companies. Only time will tell in the next two to three years.
