This is a follow up of a video that I made covering this topic.
Speed is key. This is the lesson that everyone should be taking away from the most recent technological advancements, especially concerning AI.
Few will dispute that we are seeing a pace never attained before. When it comes to innovation, development, and expansion, things are operating on a multiple as compared to what we are accustomed to. In fact, we are, perhaps for the first time, seeing some of the potential of the digital world.
The idea of the technological singularity was long discussed. For most, it is something that was (is) unfathomable. Who can really understand a pace where technology is advancing at a pace faster than humans can comprehend?
Over the last couple years, we are gaining some insight into what that looks like. It is true that it is still foreign to us, we are gaining an idea of the metrics which things are operating upon.
With technology, the key is how it affects everything. General purpose technologies (GPT) are foundations for not only the economy but society.
This is what we are dealing with right now.
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How does money keep pace?
Before diving into that, let is revert back to the monetary system. This is something that does not change. Many feel money should not change but this is not accurate in my view. Money has changed over the last 2,000, with the medium of exchange along with store of value being swapped out.
The constant is the monetary system. Few even consider what this is. Ultimately, we are dealing with the combination of accounting and communications with the ability to settle over the top. Naturally, the technologies associated with the components, especially communications, was radically altered.
Which brings up an important point: the money has to keep pace with the communication system. If it does not, we have a downfall in the system.
Economics is moving away from units of product. That was what many facets were comprised of. For example, inflation discussions centered around the view that this is "too much money chasing too few goods and services". In a physical world, this could be valid.
In the digital realm, units is no longer an issue. We can download unlimited number of 99 cents songs from iTunes. The limit is not based upon a unit cap. Instead, we have bandwidth making the determination.
And what is this based upon: the speed of the communication system.
Obviously, the traditional financial system has adapted to "internet speed". This was done over the period of a couple decades.
It is, however, something that is about to change.
The factors of money that are important when it comes to the economy is quantity and velocity. It is common to only look at the quantity, ignoring the latter. This can provide a false read on what is taking place.
With the digital world, we are dealing with unlimited unit numbers. Then we have the expected entry into the agentic world, where AI agents operate autonomously 24/7. A percentage of these will be conducting financial transactions at ever increasing speeds. It is also likely that the number of micropayments absolutely explodes.
Money is necessary for economic expansion. It is simply stored energy. Each unit can be converted into economic output, thus "buying" energy. For centuries, we were fairly constant in this arena. Humans can only operate as a given pace. Machinery has hastened things such as manufacturing, giving us major economic expansions such as the Industrial Revolution.
All of that is probably child's play compared to what is coming.
The velocity of monetary system will keep increasing. Fortunately, this is a fairly predictable rate since we know what communication systems are doing. Between advancements in WiFi, cellular, and satellite system, we can see how quickly the speed in increasing. For example, the capabilities of 6G are already known, at least within a certain range. We also have forecasts as to when they will roll out. With that information, it becomes simple math.
Here is where the challenge will arise.
In my opinion, the pace of the need for money will be faster than the acceleration of our communication systems. Hence, we are back to the amount (quantity) of money. This is where the traditional financial system is screwed.
When it comes to general economy money, we are talking about the money supply (not the monetary base). This is the amount of a currency, like US dollars, that is created by the commercial banking system. The legal tender is what most people use for their transactions.
It also what is becoming obsolete. Banks simply cannot produce enough money through loans to expand the money supply in an agentic world. Some other form of monetary expansion is required.
Here is where crypto enters the picture.
My view is we will, at some point in the next 10-15 years, see the economic singularity. This is defined as a 30% annual increase in global GDP (or a 10x over the rate of the Industry era). If that is the case, a significant percentage of this will be fed by the increase in bandwidth. However, increased units of money will be required.
Crypto offers the ability to expand in rapid fashion. The barriers that exist within the existing financial system are not present. Of course, governments are trying to shoehorn crypto into that system, something that will fail to meet the growing needs.
Speed is key and only crypto, which was developed in the digital world, can keep pace.
