Reatching into the blockchain: A blockchain-powered decentralized economic reboot

It is the year 2040. A financial crisis, starting from China’s housing bubble burst, has been raging for more than 8 months and is threatening to throw the world economy and global trade into permanent turmoil.

In the midst of this uncertainty, many communities and nation states are in the process of decoupling from fiat currencies and implementing a blockchain based system. Supported by the ubiquity of blockchain-ready phones and apps, many found the transition towards blockchain easy. Over time, local communities who adopted cryptocurrency microtransactions and blockchain based smart contract systems performed better economically than communities who did not. Core to this decentralized economy is a layered blockchain infrastructure with the oldest and most decentralized blockchain, Bitcoin, serving as the base layer upon which other, called Layer-2, chains are built. Powerful Layer-2 blockchain protocols are essential to handling the data streams of the new decentralized economy. Yet it is Bitcoin’s energy intensive proof-of-work which serves as the ultimate guarantor to solve contradictions and conflicts arising from more application-specific Layer-2 blockchain protocols.

The rapid influx of people using decentralized apps as their primary means of economic activity successively caused the crypto-based ‘shadow economy’ to directly compete with the old economy, instigating more and more people to convert. An unstoppable cascade towards a global decentralized economy has begun. The transition also spawned many innovative and brilliant tech solutions to recurring problems in human interaction, from shared cloud applications to decentralized conflict arbitration to democratic participation.

Yet not all things are rosy. As governments and big businesses increasingly lose control over the economy, they also see their power and responsibility over people diminished; from schooling to transportation to welfare to security. Given the fractured nature of the layer-2 cryptographic protocols and their adaptation, no unified blockchain solution has yet been found to compensate for public good spending, leading to a very patchwork coverage for basic societal needs and social investment schemes.

Despite societal inequality, the world is greener and more connected than ever before.

The high energy requirements for participating in the decentralized economy fostered an urge in nations to drive energy transition towards cheaper renewables all around the world with remarkable impact on decarbonisation targets.

A slow transition in economic mindsets towards sustainability is also taking hold in the wider population and businesses. Because total money supply is capped by the blockchain, and earned bitcoins don’t depreciate, global consumption and spending behavior is gradually shifting towards a saving mentality. Many people find themselves rethinking their priorities; valuing what is sustainable long-term over perishable short-term pleasure.

Further reading:
https://vukolic.com/on-the-fut...

The upcoming Reatching into the Rabbithole is organized by Philipp Markolin, together with the Rabbithole team (Giorgio Ravioli, Rasmus Ischebeck, Vinisha Varghese, Ipek Efe and Gesara Bimashofer) - along with the «white rabbit» Marko Vukolic (blockchain researcher at Protocol Labs).