After the prehistoric era, I don’t have any knowledge about any circumstances when the form of payment is defined by the average people of a community. Yes, I know some forms of local currency exist, which are created by a city to keep the money flow inside and support local businesses, but usually those are backed by the country’s official currency also, so it’s rather a derivative. So from stones and seashells we evolved a few thousand years ago, and with the help of the internet and technology, a bunch of developers created a new money instrument which is more or less accepted by the people. For the first time in history, an ordinary man’s currency is globally accepted as a form of payment. Before kings and governments/central banks took the exceptional right to issue money into society, they were still tight on it to regulate it. If it’s not wild enough that an idea with some program code and hardware background is revolutionizing our world right now, let’s see the concrete numbers.
All of the crypto total market capitalization was 3 trillion USD at the end of 2021, and even now it’s around 1 trillion. Only the biggest companies can be compared to this, like Apple, which was worth 3 trillion at its peak as well. Maybe it’s not sounding like too much, just one company, but if we consider right now, because of the slowed down sales of cars, the whole global automotive industry is worth 3 trillion, it puts into perspective how big an impact cryptos have made. And that market capitalization is barely the sum of coins and tokens’ prices. It’s not considered in it how many companies connected to blockchain are formed, how many jobs are created, how many investments are made in the upcoming projects etc.
Cryptos have made international transfers more accessible and much cheaper than ever before. I believe the big bag holders made a game out of it. How can they make a transfer with the lowest fees? We have seen millions of dollars transferred for only a few cents because they used the less congested network periods and they were able to pass with low fees. Also, for the average person, fast and reliable payments make a big difference. Around 1.7 billion adults worldwide don’t have access to bank accounts. For them, blockchains and decentralized finance can deliver new solutions where they can self-custody their own funds. Actually, developing countries are showing great progress in digitalization. Basically, they are skipping steps, which have long since been exceeded, but we still have them because we did every step by step. This also means for us, the “proven old things” are holding us back if we are not careful enough and not progressing with the better solutions. Loaning on blockchain is a big economic factor. Those can get loans too who don’t have the credit score for it in the banks or microloans for the developing world.
Small businesses could also be affected by blockchain technology. They can even issue their own tokens as a customer reward program. They can accept crypto as a payment too, and increase their customer base this way. If we are thinking about this for a bit, more than 10% of the US population has invested in some crypto by today. Globally, the estimation is that one billion people have already used some form of crypto. That is a pretty big percent of the population, and it is worth targeting. Usually, small businesses can switch easily to a new form of payment, and they can even spare some money on the terminal’s fees.
After the small, let’s inspect the big. By today, even that has happened, what was unimaginable before. The first countries that accepted Bitcoin as legal tender and official currency were El Salvador and, after that, the Central African Republic. In countries like Venezuela, where inflation peaked, cryptos became an important tool to fight against inflation and also to accept support from family members who live abroad. In Panama, Bitcoin is legal tender by law, but it’s not an official currency yet. Many more countries are watching the blockchain industry and where it’s heading and forming plans of adaption. On a national level, we have to mention the shadow side also, because some leaders from Russia and Iran have already stated they are considering avoiding the sanctions with crypto. It’s also well known that countries like North Korea are also doing this practice, and they are actually behind some of the crypto hacks.
Predicting the future is a good way to be proven wrong by time, but people can’t resist making predictions. So let’s fall into this enjoyable mistake and check out what is waiting for us by the opinion of the experts. The World Economic Forum expects at least 10 percent of the global GDP being stored on blockchain platforms by 2025. That is like an extra 10 trillion USD every year. If we remember the beginning of the article, when we said that at the best time of the crypto market it reached “only” three trillion. If 10 trillion and even more were added to that yearly (because the global GDP, which is currently around 100 trillion, is rising every year too, so 10% of that will be a higher amount too), it would predict a very good future for the blockchain, and we have not even considered the already available assets moving to there also.
The equity markets are worth $95 trillion, the debt markets are worth $106 trillion, the derivatives market is worth $560 trillion, the securitized products market is worth $10 trillion, and the asset management or fund administration market is valued at $89 trillion, which combine to deliver the overall value of the market open to blockchain disruption. The World Economic Forum’s report also includes an estimate of the securities financing market’s openness to blockchain disruption. The securities financing market includes the repurchase agreement market, valued at $4 trillion, and the securities lending market, valued at $89 trillion. The overall value of markets open to disruption with blockchain, at $866.9 trillion, is a positive indication for the overall blockchain market.
When we are inspecting the economic effects of the blockchain, we can’t miss CBDC, what is stands for Central Bank Digital Currency. It is generally defined as a digital liability of a central bank that is widely available to the general public, it is the digital form of a country’s fiat currency that is also a claim on the central bank. 105 countries, representing over 95 percent of global GDP, are exploring the possibilities of the CBDC or considering to issue it. 10 countries have fully launched a digital currency, with China’s pilot set to expand in 2023, Reserve Bank of India will introduce a digital rupee sometime in the 2022 to 2023 financial year. Jamaica is the latest country to launch a CBDC, the JAM-DEX. Nigeria, Africa’s largest economy, launched its CBDC e-Naira in October 2021. Even CBDCs are not going to be decentralized, but it’s still a blockchain based distributed ledger and since it’s supported by Central Banks the economical impact will be big.
The tax aspect of the blockchains are getting more and more important. Right now mostly they are taxing as an income tax after trading, but it will be formed by time. Also blockchain companies employing thousands of people. Only US have 726 blockchain companies. The larger ones like a popular exchange employing 4000 people. According to one survey, almost 11% of the not blockchain related companies were interested in the adoption of distributed ledger technology or blockchain technology. Almost 31% of agricultural organizations, 40% of automobile organizations, and 41% of consumer organizations have expressed interest in blockchain adoption. The highest share of possibilities for the adoption of blockchain technologies is evident in the case of digital communication and information technology, and financial services companies. The next most promising sector that presents possibilities for blockchain adoption refers to health and healthcare companies, where the adoption rate is 72%. Furthermore, blockchain is also more likely to be adopted by around 61% of companies in education and 50% of companies in the energy and utility sector. Interestingly, around 40% of the government and public sector agencies surveyed in the report expressed interest in blockchain adoption.
Blockchains will forms our reality and daily life and through us it will impact the economy also. Since its a fastgrowing industry it will raise the next big companies and improve smalls too. It will create a lot of high added value jobs. The countries learning to get the most out of the blockchain ecosystem will be getting stronger. There it is a very interesting future ahead of us, and we will be here to study and be part of it.
