How big can cryptocurrency get? This is a question people are asking.
From what can be observed, people look at something like this through the mental models they understand. Sadly, this is causing many to overlook how big cryptocurrency is going to be.
This is natural since we all deal with new information in the same way. We have our "mental databases". When something additional is added, we create reference points to what we already know. Thus, the information is not floating around in a vacuum.
Unfortunately, in a situation like this, it can also serve as a form of prejudice. We look at the situation analyzing like everything else. Within the cryptocurrency world, this appears to be common. For that reason, let us step back to see what is really going on.
After this, perhaps we will not be part of the group that underestimates how big cryptocurrency can be.
Source
Fastest Growing Asset Class.
Raoul Pal is one of the most followed cryptocurrency influencers out there. He is a successful Wall Street investor who turned cryptocurrency proponent a number of years ago. He is fully supportive of Bitcoin and Ethereum, having most of his personal holdings in those two tokens.
He did an interview where he discussed the future of cryptocurrency. His target for 2030 is a market cap of $250 trillion. According to him, this would make it the fastest growing asset class in history.
Here is where the reference points enter the picture. People look at cryptocurrency as a different asset class. This is truly not the case. It is more basic than that.
In short, cryptocurrency is not a different asset class. Instead, almost everything is going to end up as cryptocurrency.
Presently, we have stocks, bonds, and real estate. Those are the primary asset classes that most individuals invest in. On top of there, we have a host of derivatives that are mostly used by the banking and Wall Street institutions. These amount to more than the rest of the classes put together.
Nevertheless, focusing upon what most people invest in, we can easily see how cryptocurrency is not separate from them. Through the tokenization process, we will see all of them in the form of cryptocurrency.
Real estate is not going to be different from cryptocurrency; it will be tokenized. The same is true for stocks and bonds. All will be merged in over time.
This is the major difference. As opposed to thinking of cryptocurrency as something separate from what already exists, understand that we are watching the foundation laid to incorporate the quadrillion in assets (including derivatives) into cryptocurrency.
How Big Is The Internet?
Or for that matter, how big will the Metaverse be?
These are all factors in the evolution of cryptocurrency. There is no limit to how big these can be. The only barrier is bandwidth and computational power, two things that keep growing at an accelerating rate.
To believe that cryptocurrency is not going to be the foundation of our digital world is a misdiagnosis of the situation. We are looking at trillions of dollars being developed before our eyes. While the market might be stalled, expansion at this level is not. It keeps chugging ahead, not missing a day.
Is the Internet worth $30 trillion? $50 trillion? The answer is nobody really knows. It is impossible to quantify the financial and economic impact of this single mechanism. We most likely cannot calculate the present computational power utilized and how fast it is growing. In the end, it really doesn't matter.
What it does point out is a minimal levels of where cryptocurrency will achieve. As shows in this article about Web 3.0, we are watching a new database structure emerge that is going to change everything. Permissionless databases will likely be the norm in 5-7 years. This means that innovation can accelerate, providing Internet growth never seen before.
At the core of this is cryptocurrency. It is the monetary and financial system for this new model. No longer are we going to have to value companies based upon the market cap of their stocks. Instead, the value will reside at the community level. While there can be an equity stake layer, that most likely will be tokenized also.
Once we grasp the concept that cryptocurrency is not a different asset class but, rather, one that will swallow the others, then we can begin to understand how large this can get.
Age Of Abundance
This is a concept that some are starting to understand. It is based upon the results repeatedly seen with the Internet.
Over the last 25 years, we have numerous instances of what happens when the Internet comes to a particular industry. This is what music, video, communication, shopping, and information all have in common. They saw the Internet show up at their doorstep.
We know two things happen as a result of this:
- Whatever is there gets obliterated
- Abundance is generated
Few realize how much different communication is today compared to 25 years ago. We host Zoom™ calls with people all over the world. It is done in video, with no long distance chart. Back in the 1990s, that was going to be voice only with a per-minute charge for the call.
Cryptocurrency is the Internet coming to money. By extension, this means that everything financial is about to encounter these two results. We are going to see entities obliterated while abundance is generated.
It is a mindset that is difficult for many to embrace. We are looking at an economic system that is based upon abundance as opposed to scarcity. This is why few can understand it. Our entire existence saw us operate in a world where monetary and resource limitation ruled. This caused the economic system to value what is scarce.
That is no longer the case.
What is cryptocurrency backed by? Ultimately, this monetary system represents the productivity of the digital world as well as the computational power it contains. Since the latter feeds into the former, we can see how this feedback loop creates exponential expansion.
In this case, that expansion has a build in monetary value due to cryptocurrency.
We are in a world where increase becomes more valuable. Data is growing exponentially yet is only going up in value. This is in direct contrast to the existing economic models that are out there. However, the last 2 decades show how this is the "real world" case and it is showing no signs of slowing down.
Blockchains are digital ledgers. They are distributed databases. Each day, they get filled with more data. This article is being posted to a blockchain, hence will be data that can be utilized by many. Down the road, there will be mechanisms built that scour and analyze all this data. Thus, the total value grows as more is placed in there.
Therefore, in closing, do not underestimate how big cryptocurrency can be. We cannot look at this through the mental reference points we constructed. It is completely different. This is a realm which will consume most asset classes out there while also growing at an exponential rate.
Doing some simple calculations will show how large things can get. The numbers truly do become absurd.
And that is what we call abundance.
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