The Exponential Age: Why This Favors Cryptocurrency

We live in the exponential age.

This is something that most are familiar with. We heard of things such as Moore's Law and the pace of processors. Then we have the story of Kodak that simply could not keep up with technology they actually invented. We are seeing the entire automotive sector being upended by electric vehicles.

Looking back, the smartphone, which was the convergence of three technologies, obliterated the market in a little more than half a decade.

Companies that understand what is taking place are able to potentially navigate the waters. Unfortunately, this is not most. The majority of our corporations are of the institutional mindset. What this means is they operate like the behemoths they are.

This is fatal. When living in an exponential age, pace is key. This is evident in areas such as investment. If firms are not putting enormous sums into R&D, they are going to be left behind.

FinTech already did a lot of damage to the traditional financial (TradFi) world. This is going to continue as cryptocurrency and all tied to it emerge.

It is something that will not be pretty for the incumbents. As technology takes off, institutions, including governments, get left behind. There is a gap between the exponential move of the technology and the linear pace set by these entities.

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Huge Opportunity

For those who grasp the gap, it is a huge opportunity. We have seen many instances where industry leaders have failed. Kodak and Blockbuster come to mind. So do major record companies. Let us not forget about many newspapers over the years.

Recently we highlights how ESPN and cable news are all in trouble. The reason is the technology shift decentralizing media. No longer is a major media company required to create and distribute a broadcast.

Web 3.0 is revolutionary because it incorporates social media and finance. The Web 2.0 social media companies live in the exponential age. They understand it well. Where they are not really immersed is in the financial. Here is the opportunity.

Decentralized Finance (DeFi) is going to be one of the most powerful shifts the world has ever seen. We are going to see the 5 year moves in this industry astound people. The amount of wealth and activity generated through this sector will quickly run into the trillions of dollars.

The problem is most are underestimating it.

Geared For Linear Thinking

Here is an example I read: Take Wembley Stadium and rain.

The rain is exponential. It drops at a rate each minute but doubles. So the first minute is one drop, then two, then three...If it takes 30 minutes to exit the stadium, how many minutes into the rain do you need to start leaving?

Linear math says that in 30 minutes, you will have 30 drops (1 per minute). But exponential gets huge.

The answer is 17 minutes. By the 47th minute, there would be 141 trillion drops per minutes (as compared to 47 on a linear scale). Of course, by minutes 48, this doubles again.

Our minds are not conditioned to think in that capacity. Here is where we often underestimate the pace of change.

This was true for the last 40 years. It is now kicking into overdrive.

Not Operating In A Vacuum

The best way to understand the potential of cryptocurrency is to look around us.

What is computing going to be like in 10 years? Consider how far it moves in the last decade. What about our communication systems? In the early 2010s, video conferencing was not much of a thing. Today, most are part of the Zoom generations even if they aren't Zoomers.

The point is we are looking at massive upgrades in infrastructure simply due to human ambition. What kind of video editing software will be available in a decade? Will this all be done by artificial intelligence? We can see how quickly this is moving.

Ultimately, we are going to see a massive economic shift like none other before. Economies will rise in ways never seen before. By the end of the decade, mixed reality will provide some interesting options with the multi-world idea.

It is likely we see the first economies that are completely virtual.

Consider the early use cases for the decentralized autonomous organization (DAO). This is something that is being experimented with, so far having a few use cases in the wild. That said, by the end of this decade, this could be the norm.

What happens when billions of people around the world own a stake in different projects that are generating trillions of dollars in value?

More importantly, what happens to that value once they acquire it? Here is the DeFi steps in.

There are people who were traditionally excluded from the finanial system. They have no relationship with financial institutions. What we are presented with is the YouTube era who never watched the nightly news. There is no bond to even break.

Here is where the major banks and other brokerage firms have an issue. They are not exponential in their approach. People like Jamie Dimon operate in the institutional mindset. In other words, it is linear in approach.

Cryptocurrency is technology. Even worse, it is open source technology that allows people to take software provided by others and expand upon it. This is slower than centralization to start but the eventual decentralized nature of this means the pace of innovation surpasses what the established entities can create.

Tens of thousands of projects add up. All of them are going in different directions with no correlation to each other. This is how things work.

What makes it interesting is the exponential impact of all that activity. We end up seeing breakthroughs happening that are leveraged by others. It is when these get merged with advancements in other areas that we see the "smartphone moment".

Banks and other financial institutions are known for their inability to adapt. They simply cannot operate at the pace of other entities that have exponential in mind. It is what allowed for the likes of Quicken Loans to take over the mortgage origination business.

Cryptocurrency is going to capture much of the value that is out there. It is also going to create a ton more.

The tokenization of everything is really going to alter the world of finance.

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