The New Frontier
The true emerging market of our time is the digital economy. As technology advances, we witness rapid online business growth and an increasing reliance on digital solutions. This burgeoning sector knows no borders, with its educated, innovative citizens distributed worldwide. The digital economy's remarkable expansion and ability to facilitate and distribute human ingenuity are set to continue, transforming how we live and work.
According to research from GWI, the average global internet user now spends almost 7 hours per day online across various devices. With the United Nations estimating the global average life expectancy at 72.6 years, this means that an individual will spend approximately 2555 hours online per year, or 183,960 hours – a staggering 21 years of their life – in their lifetime. The only activity that competes with internet usage is sleep.
However, despite the Internet's vast potential, it has long lacked a critical component for a successful economy: public payment and financial infrastructure. Until now, the Internet's financial system has been facilitated by private institutions globally, which has proven insufficient to support the scale and reach of the digital economy. Thankfully, the advent of Bitcoin, Ethereum, and other public blockchain technologies has provided a solution, creating a genuinely public economic infrastructure for the digital economy.
Blockchains like Bitcoin and Ethereum offer numerous benefits to internet users, including:
More effective and cost-efficient rule enforcement
Blockchain technology enables transparent, tamper-proof, and secure transactions, reducing the need for intermediaries and lowering costs for both businesses and consumers.
Reduced potential for abuse by centralised parties
By utilising decentralised networks, blockchains prevent any single entity from dominating or manipulating the system, promoting fairness and trust.
Ease in creating new rules-based systems
The open-source nature of blockchain technology allows for developing and implementing new systems, fostering innovation and collaboration.
User-friendly transitions between systems, fostering system-level competition
The interoperability of blockchain networks enables users to switch between different systems more efficiently, encouraging competition and driving improvements in efficiency and user experience.
One of the defining features of public blockchains is their constitution, which is enshrined in open-source code accessible for verification 24/7. These networks are impartial, treating all users equally and ensuring no single entity has undue influence or control.
Characteristics that Make the Digital Economy the Hottest Emerging Market
This new and rapidly expanding economy offers excellent opportunities for anyone who chooses to be a part of it. Becoming a citizen of the digital economy is a straightforward process that involves connecting to the Internet and generating a public and private key. Once this is done, citizens are pseudonymous and can interact with any business or code within the digital economy. The rules that govern the digital economy are open-source and easily accessible, and as long as citizens adhere to these rules, they can utilise the many services and benefits offered by this new economic model.
The digital economy is built on the principle of decentralisation, where power is distributed across a network of nodes rather than being concentrated in the hands of a few centralised entities. This system ensures that every citizen has an equal opportunity to participate and benefit from the economy's growth and development. Additionally, the digital economy offers a high degree of transparency and security, thanks to its reliance on cryptographic protocols and decentralised ledger technologies like blockchain. Citizens of the digital economy can enjoy the freedom to transact, invest, and build businesses without the need for intermediaries or middlemen, creating a level playing field for all. Overall, the digital economy presents an exciting and promising future for individuals looking to explore new and innovative economic opportunities.
Sectors of Opportunity:
DeFi (Decentralised Finance)
DeFi refers to decentralised, rules-based financial services that are available globally 24/7 and boast an unprecedented level of transparency. The open-source nature of their business logic allows users to scrutinise and understand the underlying mechanisms. DeFi already offers various services through smart contracts such as exchanges, lending, borrowing, asset management, and derivatives trading.
The digital economy can also provide basic redundancies to localised financial services, such as providing asset registries and token issuance for traditional companies and debt instruments. All whilst providing a low-cost accounting record for all transactions pertaining to these assets.
Considering the ease of becoming a citizen of the digital economy and the fact that over 1.7 billion people go unbanked every year, the competitive landscape for the digital economy's financial services industry is a blue ocean of opportunity with plenty of potential users.
Decentralised Autonomous Organisations (DAOs)
DAOs are organisations governed by smart contracts, with decision-making processes distributed among members. These organisations enable greater participation in global businesses and streamline governance, reducing the need for traditional hierarchical structures. DAOs can potentially democratise access to resources, opportunities, and decision-making power.
DAOs will come to serve a vital role in creating the infrastructure required to govern global institutions where stakeholder alignment is a must-have. DAOs could be used by global health, science and network infrastructure organisations.
Non-Fungible Tokens (NFTs)
NFTs are unique digital tokens representing ownership of a specific asset or item, such as art, collectables, or virtual real estate. NFTs have opened up new possibilities for creators and collectors, enabling the digital representation and monetisation of unique assets and fostering new markets and opportunities in the creative and cultural sectors.
NFTs will be used by companies and brands looking to foster closer relationships with their end clients and stakeholders.
Blockchain technology transforms the gaming industry by allowing players to own their in-game assets. With a market worth billions of dollars, gaming benefits significantly from integrating blockchain, enabling secure trading, monetisation, and ownership of digital assets. This shift could lead to new business models and gaming experiences.
Decentralised File Storage, Processing Power, and Streaming
Blockchain-based solutions for file storage, processing power, and streaming services are disrupting the traditional cloud computing landscape. By distributing computational resources across a decentralised network, blockchain technology reduces reliance on centralised providers like Amazon and Microsoft, opening the market for greater competition and more efficient resource allocation. This approach has the potential to lower costs and improve the utilisation of excess capacity significantly.
Decentralised Social Media
Decentralised social media platforms built on blockchain technology offer an alternative to traditional, centralised platforms, addressing censorship, privacy, and control issues. Blockchain-powered social media can provide a fairer, more transparent, and censorship-resistant environment for users to engage, communicate, and share information, regardless of their political beliefs or geographic location.
The digital economy has a distinct demographic of young and highly educated individuals. A recent study conducted by Triple-A's Cryptocurrency Ownership Data revealed that over 72% of cryptocurrency holders are under the age of 34, and 71% have a bachelor's degree or higher. The study further estimated that there are currently over 420 million users of cryptoassets worldwide.
This demographic is poised to shape the future of the digital economy through their investments and the establishment of global businesses. With such a talented and diverse workforce, it is impossible to predict the full extent of what the digital economy will be capable of in the coming years. However, it is clear that this young and well-educated group will be at the forefront of driving innovation and growth in this rapidly evolving industry. By leveraging their skills and knowledge, they will help to create a more inclusive, interconnected, and dynamic global digital economy.
In January of 2016, there were around 572 tokens in issuance, and as of January 2023, there are a staggering 8856 tokens. This represents a growth of 1442% over just seven years in the total number of tokens and services available in the digital economy.
Financial capital circulating in the bowels of the digital economy's financial sector has also grown substantially, growing from only $100 million in January 2019 to a peak of $163 billion in December of 2021 and sitting at $51 billion as of the time of writing. This is a 5000% increase in circulating capital in a new global financial services industry. This is further evidence that the open-source nature of the digital economy, coupled with its plentiful opportunities, can attract large capital allocations from its new citizens.
NFTs are a relatively new service sector of the digital economy. According to Statista, the circulating market capitalisation of NFTs grew 3000% from 2020 to 2021. This initial boom saw a significant decline in 2022, but it was the first iteration of what citizens of the digital economy will do with the non-fungible token standard. As the educated and young citizens continue to explore the possibilities of NFT's, we expect this number to rise as new use cases and more well-thought-out value propositions come to light.
Tokens for Coordination
The digital economy provides enhanced tools for coordinating capital, enabling the realisation of ideas and the development of fully-fledged businesses. Tokens are the digital economy's multifaceted assets, functioning as shares, debt instruments, memberships, currency, and loyalty points. They are highly versatile and help align stakeholders within a value chain.
Individuals, corporations, governments, protocols, and DAOs can issue tokens. Local entities and governments are expected to shift asset registry and management responsibilities to transparent global ledger systems. As transparency reaches such levels, the decision to use these digital economy services will no longer hinge on innovativeness but will become a transparency prerequisite for those engaging with these assets.
Users must hold and transact in cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH) to engage with and fully benefit from the digital economy powered by blockchain technology. This is similar to the necessity of holding US dollars to participate in the American economy or the Chinese yuan to engage in the Chinese market.
Additionally, as international trade and commerce continue to integrate within the digital realm, it becomes increasingly crucial for businesses and individuals to hold and accumulate reserves of these digital currencies. Just as countries conducting business with the United States maintain reserves of US dollars, we envision a future where economies will increasingly amass reserves of digital currencies like BTC and ETH, solidifying their role in the global financial landscape.
As the digital economy thrives, fueled by a talented and educated workforce, it generates valuable global services and opportunities, driving the growth of its gross domestic output. This growing economic energy will be seen in the prices of assets like BTC and ETH, as these assets give you purchasing power in the digital realm.
Embrace the digital revolution – it's global, decentralised, and bursting with potential, echoing the boundless opportunities of the American West. Fair and transparent rules, agreed upon by all participants, set the stage for a new land of the free. A land where our spectacular human ingenuity and innovative nature will find a home.
Notable Articles and News Stories This Week:
Ethereum Shanghai Upgrade Goes Live
ETH withdrawals are now live.
At 6:27 pm EST, Ethereum’s Shanghai upgrade was successfully implemented, enabling the withdrawal of staked ETH and effectively finalizing the network’s years-long transition to proof of stake.
Last September, Ethereum successfully executed its highly anticipated merge event, forever changing both how ETH is created and how transactions on the Ethereum network are validated. The upgrade saw Ethereum transition to a proof-of-stake consensus mechanism in which users stake ETH with the network to validate on-chain transactions and are rewarded for that participation with newly generated ETH. Since ETH staking debuted in 2020, participants have deposited over $34.56 billion worth of ETH with the network.
Those funds, however—and the rewards generated by them—were not accessible to users, even after the merge. Only now, with Shanghai’s implementation, are those funds available for withdrawal. And only now can Ethereum’s transformation to a proof-of-stake network be considered complete.
Read more about the upgrade here
Uniswap Mobile App Finally Gets ‘Green Light’ From Apple App Store
Following a month of review by Apple, Uniswap’s mobile app has finally secured its place in the iOS app store.
It is now available for users in “most countries” — including the United States — according to a tweet from Uniswap Labs on Thursday. Uniswap assured, “we’ll continue to launch in other countries as soon as Apple lets us.”
In addition to allowing swaps between the Ethereum mainnet, Polygon, Arbitum and Optimism, users will also be able to track their NFT collections and purchase crypto with their debit cards through MoonPay — an integration that was rolled out on the exchange last December.
Read more about the wallet here
European Parliament to Pass Crypto Licensing Laws, Strong Support Indicated
The European Parliament seems set to rubber-stamp landmark new crypto licensing laws next week, as a document published Wednesday suggesting only a single, expected amendment has been tabled to the law ahead of a crunch final vote.
An official briefed on internal talks told CoinDesk it was likely that a planned vote will be pushed back one day as part of routine reshuffling of the schedule, implying a debate on Wednesday, April 19, and a vote on Thursday. The official asked not to be named as no final decision has been taken.
Lawmakers and European Union member states, who meet in a separate body known as the Council of the EU, already agreed an outline of the law last year, alongside parallel anti-money laundering rules known as the Transfer of Funds Regulation.
Read more about the law here
Whilst we all have the option to look, to seek to understand, it’s often easier not to. Bitcoin, Ethereum and distributed ledger technology are complex systems that require significant due diligence. At Etherbridge, we aim to lower the barriers to understanding this fast-growing digital economy.
If you are interested in staying up to date, please subscribe to our newsletter at etherbridge.co
This is not financial advice. All opinions expressed here are our own. We encourage investors to do their own research before making any investments.