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If you pay attention to the news, you will hear terms like ICO, Airdrop and Metaverse being thrown around quite often. Even beyond business and technology sites, shows like “The Good Wife” have opinions about Bitcoin. Clearly, digital currency is growing rapidly, but what exactly is this new economy being built on the blockchain?
In my previous articles, I have discussed how Internet 3.0 works and the benefits of this new Internet. We have also discussed the economic justice and democracy of the new system. But how does the Internet 3.0 economy work?
Note that this is not an introduction to ICO and blockchain. Instead, we will discuss how this new economy is different and more profitable compared to the existing economy run by banks, governments and big tech companies.
Economics around the world is a dynamic field
In order to understand how the Internet 3.0 economy works, we must first understand the global nature of our economy and the amount of power it contains.
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Our current economy runs on a centralized system. This means that there is a small group of organizations that have control over the entire system. For example, banks control the flow of money, governments enforce laws and large technology companies control our data.
These organizations have very different goals and interests. Banks want to make as much profit as possible, governments want to maintain order and order, and big tech companies want to dominate their markets.
The problem with this system is that it creates inequality and injustice. The rich get richer while the poor get poorer. The powerful gain more power while the powerless are left behind.
The Internet 3.0 economy, on the other hand, is based on a decentralized system. This means that no government or organization has control over the system. Instead, they are computer systems that communicate with each other.
This network is powered by blockchain, which is a distributed database that records all transactions that occur on the Internet. This database is public and transparent, which means anyone can see what’s going on online.
The result is a fair and democratic economy where everyone has an equal opportunity to participate and benefit from the system. There is no central authority that can run the system to its advantage.
The right to modern services
Have you ever wondered: Why is it so difficult for the United States to build high-speed rail? The answer is a brush. It’s not just the United States, of course. France has the same problem. So do Brazil, Russia, India, and the rest of the world.
The problem with bureaucracies is that they don’t work well. These projects take years to complete because there are many parts of the office that need to be managed.
So let’s consider what needs to happen to bring high-speed rail to the United States. First, a project like this needs to be funded. After that, it has to go through feasibility studies. After that, it must be approved by Congress.
After approval, the project must be awarded to contractors. And even if all this happens, there is no guarantee that the project will be built. It is possible that the project will be delayed or stopped due to administrative reasons.
Politicians, lawyers, and consultants – all of whom know nothing about building railroads – get involved and make the job even more difficult. And the longer the process takes, the more expensive it is.
About monopolies and cartels – antitrust vs dishonesty
John D. Rockefeller and Bill Gates are two of the richest people in history. They made their wealth by creating monopolies or near-monopolies in their industries. And, both were taken to court for their anti-trust behavior.
These systems are supported by a system that favors the rich and powerful. The illusion of free and open markets is just that – an illusion. Instead, markets are manipulated in favor of those with the most money and power.
But what if there was a system that was designed to be unreliable? What if there was a system where monopolies and cartels could not exist?
In a blockchain-enabled economy, monopolies and cartels will become impossible. This is because the fragmentation of the system can make it difficult for any single organization to manage the network.
So how can this prevent monopolies and cartels? Apart from the division of authority, integrity is related to the fact that all transactions in the blockchain economy are transparent. This means that anyone can see what is happening online.
If someone tries to create a monopoly or a cartel, it will be difficult to do so because everyone can see what is going on. A real example of something that could have been stopped by transparency is the Enron scandal.
The Enron scandal was possible because the company’s accounting practices were not transparent. If they were, it would be very difficult for these officials to steal their money.
The importance of market integrity
If you’ve ever read Adam Smith and his idea of the “invisible hand” as a catalyst for creating a free market, then you know that the key to a thriving market is fairness. Unfortunately, in today’s world, markets are not fair. Governments bail out failing companies with taxpayer money. Banks and corporations engage in fraud and other illegal activities. And the rich and powerful disrupt the system on their behalf.
We can define market integrity as it is based on Smith’s theories as following the free market principles of free exchange, open competition, and limited government intervention.
In an economy supported by blockchain, the integrity of the market will be ensured through transparency and integrity. As we have seen, these two conditions can make it difficult for anyone to commit fraud or other illegal activities.
The unreliability of such wealth will ensure that wealth is available to all, not just the rich and powerful. This is evident in how retail traders in the crypto space are able to participate in a way that is different from the official ones.
A blockchain-enabled economy can also be very useful. This is because there may be no need for commercial entities such as banks and governments to run the business. Decentralized Finance (DeFi) can disrupt the entire financial industry, because in a blockchain-enabled economy, all transactions can be peer-to-peer.
So to prove the point – the internet economy 3.0 can lead to an economic reform in which everyone in the world can participate and benefit from the system.
Fast performance, code-reading and global availability are key to the Internet 3.0 economy.
In the next article of this series, we will see that science fiction is true and discuss how machines grow. What do big tech companies and other organizations do with your data? Could blockchain be the “Sarah Connor” we’ve all been waiting for?
So stay awake!
Daniel Saito is the CEO and cofounder of StrongNode.
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