Back

Are you ready for Web 3? DeFi and Crypto will be the dominant forces

15.12.2021

It is very easy to become distracted by the monotonous output of the mainstream news, which continually focuses on bleakness and how the Western economies are now in the shadow of those of the Asia Pacific region, and that one day the debt-based structure which has underpinned American and European policy will be the sword upon which it will all fall.

If there is one thing the last two years has taught us all, it is that there is no connection between the world and its business and economic structure in the middle of the last decade and today.

Paying heed to the generic perspective that China will overtake the United States, or that Europe will sink into an abyss of red tape is all too straight forward, but the reality is quite different.

Today, decentralized finance (DeFi) is leading the fiscal empowerment of those at the leading edge, and the world’s economic future is completely borderless.

Big tech and its multi-billionaire moguls such as Jeff Bezos and Elon Musk may think that the current decade belongs to them, but it does not. It belongs to the internet. After all, that is what has made these particular moguls get to their positions of power.

The current era does not belong to China or the United States, or even on a macro level, the giants of Silicon Valley.

Whereas the internet was once region and company specific, with internet companies and software giants in California leading the charge, today it is democtatized and decentralized, and that is the way the economy is going too.

The current democratized challenge to traditional geopolitics goes beyond crypto protocols and formally arranged tech companies, as it has begun reshaping the physical world.

For absolute certain, one of the developments which is likely to represent a milestone in the shift of power will be the move to central bank-backed digital currencies, known by their acronym CDBC.

Most central banks in areas with highly developed financial markets economies are now heavily invested in developing and launching CDBCs, with the United States and China having spearheaded this two years ago.

Now, completely contrary to the opinions of central banks when cryptocurrency was in its infancy, fiat currency works directly alongside digital currencies at central bank level and banks are rallying to develop their infrastructure in such a way that it is now a priority at Tier 1 level. Just yesterday, we saw the milestone move by Wells Fargo and HSBC to bypass CLS Bank for the first time in 25 years when settling FX trades and use blockchain instead to settle trades.

That takes out the entire region-specific nature of trading and makes it possible anywhere in the world, for far less cost, and takes away the Wall Street or City of London dominance, yet this was not done by some mavericks wishing to go against the banks, but by a Wall Street giant and a City of London giant on an institutional level.

Very soon, in the same way that paper documents and news media channels moved away from printed material onto the internet which indexes it all via Google and provides a unilateral resource for everyone, every asset will be traded against every other asset in a vast decentralized table via the DeFi world of peer to peer infrastructure.

The world of national currency is now entering a period of change, where it is heading toward a digital wallet-based ecosystem and away from the traditional interbank world of single dealer platforms in which all currencies will have to vie for a place in the digital wallet system.

Very soon, digital versions of sovereign currency will become directly positioned against other digital sovereign currency and decentralized crytocurrency such as Bitcoin and Ethereum in one large digital wallet-based market in which blockchain protocols conduct execution rather than elderly single dealer platforms in traditional institutions and central banks.

With more and more people working remotely, a global talent base of highly skilled international citizens has come about, therefore borderless business is the future, and with that comes the need to distribute contracts, payment and invoicing via blockchain protocols to power the modern economic direction in which somewhere could be anywhere.

A political commnetator this week stated that when property becomes a password, all our intuitions change. He said that Soviet Premier Joseph Stalin famously asked: “How many divisions has the Pope?” But in the age of encryption, it’s not about how many divisions a state has to defend its property. It’s about how much long division it would have to do to seize yours.

With currencies, communities and entire nations becoming a network, and Web3 being led not by senior corporate officials but mavericks and entrepreneurs like Satoshi Nakamoto and Vitali Buterik, the world’s lifeblood is now very much on the blockchain and even the days in which corporate giants such as AOL dominated cyberspace are gone. Now, it’s all driven by the influencers and entrepreneurs, and that is the way the entire economy is going.

DeFi therefore is not just the future of those in the digital space, it is the future of pretty much everyone, everywhere in the world.