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The Age of Abundance And Cryptocurrency

In a technological era, things, at a minimum, resemble the physical world except at an accelerated pace. Often, we see a host of new "laws" or observations that are completely different from what we see elsewhere.

Jevon's Paradox is really fitting for this discussion. Before connecting the dots here, let's broadly define it.

According to Wikipedia:

the Jevons paradox (/ˈdʒɛvənz/; sometimes Jevons effect) occurs when technological progress increases the efficiency with which a resource is used (reducing the amount necessary for any one use), but the falling cost of use induces increases in demand enough that resource use is increased, rather than reduced

This is the key to much of the progress we witnessed during the semiconductor era. Since the 1980s, this has been in play in many of our devices and technologies.

In fact, the semiconductor industry is a prime example of this. We are dealing with a product that deflates, on a cost per performance metric, by roughly 50% annually. Yet, for half a century, this industry has seen a 13% CAGR. This is why we see chips in doorbells, dolls, and sex toys.

We are chipping everything, including humans.

This is leading to abundance.

Consider the cost of generating information today. With a chatbot, we can produce a 500 word article in a matter of seconds. Even with proof reading, we are looking at a few minutes. Distribution, due to this enormous digital communication system, can reach a million people in seconds.

Of course, like we saw with video, the quality of each unit produced is certainly questions. Abundance does not differentiate. In other words, we see a lot of garbage produced. This is part of the process.

The penetration of generative AI into most online activities is going to supercharge each. That is going to create a powerful underlying model going forward.

The Crypto Economy

We are already in the information economy. Most everything we deal with can be tied back to it. Another way of phrasing this is the importance of data. Even those industries that you wouldn't think in this manner, such as heavy equipment, generates tons of data that is collected, processed, and analyzed.

The new mantra is "information is money".

To me, this is a key distinction. The ability to separate the two is becoming more difficult. With cryptocurrency, it takes on an added level of sophistication since crypto is actually information. There is no physical counterpart (for most coins). They are bits of data that are transferred around, monitored by computers that keep the transactions on a ledger.

What this means is that cryptocurrency is part of the overall technological curve. Advancements in technology push crypto further ahead. It's foundation is in computing, meaning it is also exponential.

Here is where abundance enters.

If our economy is based upon information, something that is being generated at a faster pace. This will likely continue as the declining costs of sensors and chips means more adoption, generating even more data. We also see improvements in our ability to process and sort this increasing pile of information. That means the amount of "quality" data as a percentage of the whole can grow, since entities will be able to extract more from the same datasets.

All of this means we are dealing with systems that will require mediums of exchange along with value capture.

DeFi: The Exponential Step

We won't dive too deep in this article but DeFiis one of the major keys. Here is where we see exponentiality in action.

Finance takes money and puts it in motion. Basically, it takes value and multiplies it. At its core, this is what financing does.

Due to different innovations, we have the ability to do this with more than just money. People take value and utilize that for other purposes. Here is where we see the financing of economic expansion. A business loan is a great way to frame this concept.

A company takes out a loan, which it pays back. The goal is to generate more economic gains as compared to the cost of a loan. Hence, the business builds a factory, which can produce economic output decades after the loan was retired.

One of the biggest benefits to crypto us capturing value the present system misses. Here is where tokenization had an advantage.

DeFi is crucial because accrued value than can be put to use for greater economic output. It is a process that can generate enormous sums of wealth as we saw throughout the last century. Unfortunately, due to the state of our present system, this was to the benefit of a relative small number of people (in relation to the whole).

The Age of Abundance is something different. Those who are already involved can see what is happening. All of this is brining enormous capabilities to the masses, in a short period of time. Crypto is expanding in its reach, as new innovations are put forth.

Since we have falling prices in most areas, this is going to spur more adoption. As output increases, the pie grows in value. While prices might not reflect it, tokenization can capture it.

Here is where repurposing value tied to asset through DeFi completes the loop.

Posted Using InLeo Alpha