At first glance, a Ukrainian citizen caught up in war and a Bitcoin evangelist have nothing in common. Look a little closer and you’ll see that they do. Both have used crypto.
Bitcoiners’ ideology of decentralization and bank disintermediation is well known. Less well known is that over $4.6 million in humanitarian aid has been delivered to 2,500 households in Ukraine, via the Stellar blockchain’s Aid Assist program.
Crypto, and the underlying technology of blockchain, will increasingly be known for this kind of institutional use case. Because being a sharp financial instrument to finesse the world’s value flows is exactly what the tech was made for.
Introducing the Internet of Value
The Internet of Value (IoV) is a phrase associated with the blockchain company Ripple, who leverage the digital asset XRP in their technology stack. According to Ripple, the IoV is essentially a money layer nestled into the web. One where blockchain protocols move value and dollars the way HTTPS protocol moves information on the web (i.e. fast, frictionless and in a cost-efficient manner).
The financial opportunity this presents for banks, businesses, and governments is exponentially greater than the one available for retail. And despite Satoshi’s libertarian narrative still dominating, it will likely be the crypto-powered B2B practices that send the asset class on an irrevocable moon mission, and then filter down to clients and citizens for mass adoption. The magnitude of the opportunity is simply too big to ignore.
SWIFT’s messaging system and affiliated banks facilitate $156 trillion in annual cross-border payment volume. The value flow is enormous, but the system is slow, expensive and opaque. Days can pass with multi-million dollar payments floating in the ether, and with contingency capital trapped to cover the payment if it fails. Blockchain-based payment networks like Ripple’s XRPL or Stellar’s XLM can revolutionise the pain of moving money with low fees, disintermediation and on-chain transparency.
Tokenised assets can create a ‘digital twin’ for off-chain value like real estate, art and commodities. All known for either being high barrier-to-entry or somewhat illiquid. Representing them on blockchain-based systems can fractionalise ownership, democratising access for more people.
1.7 billion people in the world remain unbanked. That is, they are unable to access the basic banking infrastructure that we take for granted in the West. Bringing them into the fold via their mobile phones will allow them to send and receive payments using digital wallets, build a credit profile with their online identity through DeFi, and save their wealth in stable coins or digital assets if their local currency is volatile or subject to inflation. The McKinsey Global Institute estimates that financial inclusion could increase global GDP by $3.7 trillion.
Where is Satoshi’s Vision in This?
Satoshi’s vision of decentralization doesn’t necessarily get lost in the Internet of Value. In fact, it’s the IoV that makes Web 3 – a decentralized internet where users own their data, identity, and digital assets – even possible. This is known as Read-Write-Own, a concept attributed to Chris Dixon, general partner at Andreessen Horowitz’s a16z, and a though leader in the blockchain space.
According to Chris, the web has three evolutionary periods:
- Web 1.0 – Static ‘Read Only’ Web -Where users could only consume content, like news portals
- Web 2.0 – Social ‘Read-Write’ Web – Where users could consume and create via social media, blogs and YouTube
- Web 3.0 – Decentralised ‘Read-Write-Own’ We – Where users consume, create, and own digital assets in the form of crypto, Non Fungible Tokens (NFTs), and Decentralised Autonomous Organisations (DAOs). This ownership is enforced through blockchain and smart contracts, eliminating reliance on centralized platforms.
This last phase is perhaps the most consequential iteration of the net that we will see in our lifetimes. The ability to consume, create, and capitalise financially, from both content and the technology – something that was previously a privilege exclusive to the bottom line of Behemoths like X and Meta.
Just imagine: Meta dropping micropayments into your wallet every time someone reads your post or watches your video, rendered as an NFT with rights assigned to you. It’s hard to conceptualize now, but it is coming. The regulatory pathway is already here. But the money, as always, comes first. Once that base layer is implemented via the Internet of Value, Satoshi’s vision can play out on a mass scale.
That might create uncomfortable tension among crypto’s libertarian early adopters, who envision factions of Institutions vs The People; a zero-sum game, where crypto either empowers the masses or creates new financial elites. In reality, it’ll probably do both. Keep your pulse on more upcoming trends in crypto and digital assets.
