When cryptocurrencies first erupted worldwide, it mainly focused on digitizing banking and financial sectors. Not many predicted how far it would range in terms of industries and sectors in the business landscape. Today, experts believe that blockchain plays a key role in the New Digital Economy.
The digital economy is run by the internet. 54.4% of the world’s population is online, 42% use at least one social network, and 68% are on mobile. The knowledge accessible to the public, mostly for free or at a low cost, is unlimited. Not to mention the power of how the internet brings people from every corner of the world together. It has led to greater connectivity and easier transactions between consumers and businesses, thus destroying traditional industries and paving the way for new ones. Now there is talk of a new digital economy, one that is run using the blockchain technology.
Digital transformation has not only changed our individual lives. It has led to a change in the global economy.
“The backbone of the digital economy is hyperconnectivity which means growing interconnectedness of people, organisations, and machines that results from the Internet, mobile technology and the internet of things (IoT).”
According to the Research Institute, 90% of the revenue generated in the digital economy is done by nine companies: Apple, Google, Facebook, Amazon, Microsoft, Baidu, Alibaba, Tencent, and Xiaomi.
The internet has been compared to the invention of the printing press in the 15th century, where information was accessible to everyone in the public. This led to people becoming more connected to one another.
The internet has already created so many changes in how we operate in our daily lives, in terms of booking a car to go to a specific destination or grocery shopping. A lot of the processes are already digitalised.
Cities like Dubai and Amsterdam are becoming smarter. Its digital infrastructure creates good connectivity between companies and people through extensive fiber connectivity and internet exchange points.
The rest of Europe and Asia has also made great efforts to become more digitalised. Estonia, for instance, has presented the idea of digital citizenship. Germany, with its strong economic performance and experience in creating industrial growth, will also profit from the fourth industrial revolution.
Blockchain in the New Digital Economy
The key to the future of the digital economy is a secure, low-latency digital infrastructure. Many of the activities we are performing today will be performed between interacting machines tomorrow, taking the digital economy to the next level. And even though it is still in the early stages, blockchain technology is already playing a major role in this. Many believe that if society wants to take advantage of the full potential of the internet, the fundamental structure needs to be blockchain technology.
It is important to note that technological transformation processes typically take time to be adopted by the masses. With blockchain, the cost of transactions could be reduced dramatically and this has the potential to become the system of record for all transactions.
In that case, the global economy could once again undergo a profound shift. Blockchain-based sources of influence and control could appear. Crucially, though, it is not a ‘disruptive’ technology — it is a foundational technology. Blockchain has the potential to create new foundations for our economic and social systems.
Blockchain is not a ‘disruptive’ technology — it is a foundational technology. Blockchain has the potential to create new foundations for our economic and social systems.
— Research Institute
“Blockchain is Good — Cryptocurrencies are Bad”
Blockchain is the technology behind cryptocurrencies like Bitcoin, Ethereum, Ripple and so on, but cryptocurrencies are just a byproduct of blockchain. This has led to the opinion by many nations that “blockchain technology is good while cryptocurrencies are bad.”
Nonetheless, cryptocurrency is still just one of the many applications of blockchain technology. If you look at the countries (e.g. China) that are implementing strict regulations or banning cryptocurrencies are also avid supporters of the blockchain technology because the potential of the technology is too great to ignore.
One of blockchain’s main features is its transparency, which helps different parties verify data whilst also eliminating security issues. Governments and some businesses hold information such as full names, social security numbers, birth dates, addresses, and so on, which makes them a good target for hackers. Single-point-of-failure-risk could be avoided and minimised through blockchain technology, where data is embedded cryptically and stored in shared databases, protected from deletion, tampering, and revision. Every agreement, every process, every task, and every payment would have a digital record and signature that could be identified, validated, stored, and shared.
Advanced technologies like blockchain have the potential to transform governmental and business systems on a global scale. As we discussed, many countries like Dubai, Finland, and Estonia are already adopting the technology to create “smart cities” while companies like Finterra, IBM, and Ford are utilising the blockchain technology to enhance efficiency, transparency, and accountability in their businesses.