Sourav Mondal
Image credit: Unsplash
Cryptocurrency is a fundamental building block of the next major evolution in the global economy. Beyond being a decentralized digital currency, crypto is central to creating what many call a “computable economy,” powered by Web3 technologies — developing programmable systems that tie capital and commerce together with a layer of trust to unlock new efficiencies.
Crypto is already mainstream for many. The world’s largest cryptocurrency exchange, Binance, has more than 230 million users as of November 2024. In fact, during the US Presidential election week alone there were over $20 billion of USDT into major exchanges with Binance capturing over $7.7 billion of those inflows. This trend looks to be only getting started.
In a recent interview with Benzinga, Binance CEO Richard Teng explained the mass user adoption that crypto is seeing, “Earlier this year, we saw Bitcoin ETFs approved in the U.S. and globally, from Brazil to Hong Kong and Australia. The net inflow into Bitcoin ETFs has already surpassed that of gold ETFs within a year, demonstrating the immense pent-up demand.” Teng continued by explaining, “Institutions spend months conducting due diligence before entering this space. Now that the U.S. and global environments are more favorable, we expect even more institutions to onboard in 2025.”
Web3 can continue to build on top of this increased user adoption by offering financial products and services to the underserved around the world. “Crypto has changed the lives of so many people, especially where banking systems are expensive or inaccessible,” Teng noted.
As we look forward to how Web3 will revolutionize how we transact online, here are some important consideration to take into account:
Trust In Institutions Continues to Erode
Traditionally, transactions have relied on an intermediary like a bank to create trust and govern relationships. A computable economy leverages decentralized technologies, such as blockchain and tokenization, to manage these transactions. It produces the trust necessary but at a significantly lower cost per transaction. This transformation is often described as the “industrialization of trust.”
Trust is central and often elusive. The Edelman Trust Barometer has been tracking how people view major institutions for more than two decades. “Trust in companies from global powers are in decline,” the 2024 report stated, echoing similar notes from each of the past 10 years.
With trust eroding from traditional institutions, it has opened the door to innovative solutions. The industrialization of trust reimagines how value is created and managed.
Tokenization of Physical Assets
Tokenization converts ownership rights of an asset into a digital token, stored on a blockchain. This creates a record of ownership — whether it’s a currency, physical good, or intangible asset. These tokens can be traded freely by owners or programmatically with rules enforced by smart contracts.
Tokens, tracked with public ledgers across decentralized networks are transparent, creating trust. At the same time, this model is easily scalable to meet growing demand without massive disruption to infrastructure.
Once tokenized, assets gain several advantages:
- Interoperability: Tokenized assets can seamlessly interact with other digital systems, enabling frictionless trading across platforms and geographies.
- Transparency: Public blockchains ensure that every transaction involving a tokenized asset is recorded and verifiable.
- Accessibility: Tokenization democratizes access to traditionally exclusive asset classes, allowing smaller investors to participate in markets like real estate through fractional ownership.
This process produces a unified digital marketplace. Assets can be exchanged efficiently and securely in digital transactions.
Cryptocurrency Enables Low-Cost Trust
Crypto plays a pivotal role in this system by powering the financial infrastructure for the computable economy.
Blockchains like Ethereum power the creation of decentralized applications (dApps) and smart contracts to automate complex transactions. These technologies eliminate the need for traditional intermediaries. In turn, this reduces transaction costs while allowing a secure exchange of value.
Additionally, cryptocurrencies function as programmable money, allowing developers to encode conditions directly into the currency itself. For example, payments can be automatically released upon the fulfillment of contract terms, verified by blockchain consensus. This capability aligns perfectly with the concept of programmable commerce.
Computable Capital
For the computable economy to expand, it needs to go beyond tokenized assets, however. Think computable capital.
Computable capital is more than just the digital representation of assets. It allows capital to be programmed to perform specific functions autonomously.
Here are a couple of examples:
- A tokenized bond automatically pays out dividends to holders at pre-defined intervals.
- Supply chain financing with smart contracts releases payments as goods move through verified checkpoints.
- Tokenized mutual funds adjust portfolio allocations in real-time based on predefined market conditions or performance benchmarks to optimize returns.
- Tokenized shipment containers release payments to logistics providers at each stage of delivery.
- Hospitals lease tokenized medical devices, with payments adjusted based on usage data collected via IoT sensors.
- Scholarship funds are distributed incrementally to students based on performance metrics like grades, attendance, or project completions, verified through school systems.
Truly, the use cases are nearly endless. Not only does it accelerate transactions, but it also significantly reduces the manual work to track and pay for goods and services.
With these capabilities, economies move closer to systems capable of executing tasks through programmable mechanisms — without requiring human intervention.
The Next Step
There are likely regulatory challenges to adoption, but the underlying technology is already in place. As digital currency matures and becomes more accepted, the line between physical and digital economies will blur.