---
title: 2.6 Crypto Ecosystems and Emerging Technologies
description: Crypto, the 21st Century General Purpose Technology
---

# 2.6 Crypto Ecosystems and Emerging Technologies

The focus of this lecture is on crypto and emerging technologies. But from another angle, this could equally be stated as _Crypto, the 21st Century General Purpose Technology_ Economic history loves to reference general purpose technologies like the steam engine or the microprocessor, but when we zoom in and look fundamentally at how general purpose technologies operate we can gain a much clearer picture of the _timeframes they operate on_, inherent blockers and presuppositions for their success, and most importantly, the value proposition of intermingling with other emerging technologies of the time. 

## Emerging Technologies of Our Time

Looking towards past technological revolutions can help inform our understanding of what to make of the current technological revolution known as _the fourth industrial revolution._ Three important points deserve attention: 



* **The Time For Impact:** While a ‘revolution’ is often constitutive of a broad and sudden change, recent studies of macro-economic growth indicate that few changes actually took place in the British economy until the 1830s, with the majority of population unaffected until the 1850s and 1860s. [^1]


* **The Industries Are Not Always The Ones We Expect:** At the same time, the industries that experienced the most growth through 1830, grew due to specific innovations that were minimally if at all related to ‘industrialization’ [^2]. This view is further complemented by Clark, who holds that improvements from new technologies are most visible in the production of textiles (increased by 43%), transportation technologies (increase of 20%), and agriculture (increase by 20%) with a much smaller portion credited to improvements surrounding coal, iron, and steel. [^3]


* **The Social Savings Lag By Decades:** It was not until the 1830s that the first railroads began to be implemented, while “social savings” due to steam engine improvements remained stagnant at 0.3% per year between 1830 and 1850.[^4]


* **General Purpose Technologies Facilitate Technology Diffusion:** While the steam engine was not the most impactful technology at first, it quickly became the foundation from which entire industries emerged. Blockchain, in a similar vein, inhabits the same ‘General Purpose Technology’ place, as a foundational piece of digital infrastructure for the future of smart-contract based execution of assets and data.

**Keeping this in Mind, Here Are Some of the Most Promising Emerging Technologies That Intersect Directly With Crypto:** 

**_Virtual Reality:_** Virtual Reality refers to 3D digital experiences, either entirely based from within a digital environment, or layered onto a physical environment using some form of technology. People most often associate it with the metaverse in a fully digital environment (ready player 1), or something akin to a more ‘hands on’ _Pokemon Go_ or _Google Glass_ for layering in the physical world. 

Overlap between crypto and virtual reality is multiple but most interesting in the following areas: 



* _Decentralized Metaverse - Land, Ownership, Property and Items:_ Using a Layer 1 blockchain to handle all of the value inside of a metaverse in a decentralized and permissionless manner, is the basis of creating a ‘community’ operated metaverse as opposed to one operated exclusively by a big tech company. Crypto facilitates the object, account, asset, and property ownership of the items inside of the metaverse. 
* _NFTs:_ Any type of future non-fungible value interfacing with the physical world, can be harmonized with virtual reality to create interactive incentives between the backers of the project and the users. The real-world implications are simple: Use a VR headset, to be able to see or collect the NFT. In the metaverse, the NFT can be embedded across the digital-verse and collected by any active user.
* _Gaming:_ The close connection between VR and Play to Earn (P2E) gaming is well known → An enhanced gaming experience can center around connecting physical objects and movements with in-game actions. Virtual reality effectively bridges the gap between the personal and the digital for an integrated gaming experience. Set within a P2E game, the user would own and participate in an open and permissionless game economy such that the assets and collectables they own in the game, are exclusively theirs. 
* _Network States_ : Digital countries known as network states are discussed in detail in Module 5. However the idea expands to any social or political group: In short, only a user with a specific NFT or access to a gated community, conjoined with a virtual reality set, would be able to see a layering of their digital country inside of the physical world. This would refer to viewing entrances to specific community areas, banners showing representation of that country, or resources and other benefits in being associated with the country. 
  
**_IoT / 3D Printing:_** The Internet of Things (and the prospect of printing intelligent objects using 3D Printers) refers to the ever expanding world of intelligent objects capable of receiving, connecting, and transmitting information between one another, and a central node. The overlap with crypto is multiple:

* _Automated supply chain networks:_ In 2017, a number of projects launched promising to re-invent supply chain management. The basis for this is the prospect of autonomous verification and traceability networks, outsourced to blockchains for decentralized and permissionless management. This would center around any single asset or event, that a sensor would be attached to, such that there would be an immutable proof hashed or recorded on-chain to be used up and downstream by suppliers and purchasers. 
* _Decentralized Insurance:_ Closely connected to autonomous supply chain networks, is the prospect of forms of decentralized insurance built around independent sensor data from the Internet of Things. These markets could vary from a smart fridge, and smart home, to a suite of sensors collecting agricultural, air quality, water quality, and biomass health. Entities such as IBM have actively experimented with such use-cases in terms of water resource management and settlement. The value proposition here is the following: Contract based settlement, payout, and financial transfer of liability, based upon a smart device(s) data reading recorded on a chain and interacting with a smart contract.
* _Data Markets of the Future:_ In the world of the Internet of Things implicit value centers on the concept of ‘information’. A sensor can collect data, from which data can be collected, aggregated and utilized for enhanced _insight, decision making_, and _financial planning. _Classic examples refer to the quality of cargo moving between countries, first-mover advantage on fresh data coming from street sensors used to determine traffic and consumption levels, and even data surrounding climate measurements for insurance and real-estate prices. Data markets - moving on-chain - suggest that the general public will have automated and permissionless access to increasing amounts of information.  
* _Blueprints and logs of printed items:_ For 3D printing purposes, the future marketplaces of blue-prints, designs, and rights to 3D Printed objects is oriented to moving on-chain. The concept is quite straightforward: With the accelerated development of 3D printed systems and objects (closely connected to advances in material science) a market for the sharing and building of different objects becomes more affordable across geographies and jurisdictions to the extent that a retail user could self-print a household item. Blockchain offers the opportunity for these systems to be publicly accessible, open-source, and decentralized (most likely using NFTs) in a similar way to how art creation and monetization is becoming decentralized. The difference with 3D printing, is that the blueprint is connected to generating the item physically. 

**_Artificial Intelligence / Machine Learning / Neural Networks:_** Perhaps no other field has drawn such scrutiny, hype, and fear as the concept of artificial intelligence. For the sake of convenience we link together AI, with Machine Learning (rapid algorithmic processing of information), as well as Digital Neural Networks, to refer to the increasingly responsive, interactive, and automated world of software. From ChatGPT to Boston Dynamics, the future intersection of AI and blockchain is closely connected: 


* _Trading Bots:_ The simplest and most actively utilized form of AI / ML is at the intersection of trading, MEV, and automated interaction with smart contracts. Many market dynamics are correlated with automated contract execution strategies that are becoming increasingly sophisticated. These bots, and AI’s have the potential of analyzing large amounts of data and triggering trade positions, 
* _AI-Generated Art and Value:_ A large portion of the production value to be utilized in future metaverses, gaming engines, and in terms of art, music, and content, is moving into the realm of becoming AI-generated. This has the prospect of both saturating and expediting the development of crypto-networks, at global scale. Imagine for example, a logo generating AI, that any user can use after purchasing a specific NFT or paying in a specific token? 

**_Synthetic Biology and Genomics:_** CRISPR and CRISPR Prime, are biotechnologies that allow individual strands of DNA To be edited and altered. Companies like The Odin, are increasingly demonstrating the capacity to participate in the revolution in synthetic biology in a DIY manner. These breakthroughs have increased the ability to downsize access to revolutionary biological tools, while also increasing the importance of biological data - specifically genomics. Crypto as a foundational technology for facilitating the transfer of data and information with value attached, is poised to play a massive role in the synthetic biology revolution: 



* **Retail Value of Genetic Data:** Today the value of genomic data is locked in private siloes, usually concentrated across a select few countries in Europe, China and the USA. Many data sets are missing from individuals in Africa, South East Asia and South America. Crypto has the opportunity to create systems-level incentives for individuals to upload and share their genomic data, with privacy guaranteed, and access limited to those who are willing to pay directly to the individual for the fair value of it. 
    * **Clinical Trial Data/ Decentralized Genetic data repositories and computational programs.** One step above simply licensing access to an individual genome, is the ability to share and monetize large scale studies from between jurisdictions. In essence, being able to decentralize access and insight - and eventually aggregate learnings - from different clinical trial studies dealing with genomics, metabolic processes, medicine reactions, and more. All of this is done in a manner such that regulatory bodies could access the information for approval for certain drugs, or commercial companies could re-sell IP and content developed based upon the on-chain information or hashes. 
    * **DeSci for biohacking labs and Research.** The final frontier of the genomics revolution centers on financing and sharing the discoveries done by increasingly decentralized labs around the world. Decentralized Science seeks to revolutionize how science is done such that a protocol or self-executing code can better distribute and coordinate the flow of value based upon decentralized communities preferences. This would mean funding for new and radical experiments, as well as on-chain sharing of results with value built into the process.

**_Space Exploration:_** While Space Exploration in itself is not a technology stack like AI or CRISPR, it is an industry that is pushing the limits of science and technology, from which crypto is most likely going to play a massive role. Today there are a number of initiatives working at the intersection of crypto and Space research. And while more use-cases remain to be developed there are some that are already clearly visible: 


  * **DAOs for Resource Coordination and Financing:** Utilizing on-chain infrastructure for coordinating the financing, ownership, and management of Space resources. From launching payloads into space, to operating space stations, to colonizing planets, to fractionalizing profits from asteroid mining initiatives. 
  * **Non-State Space Initiatives:** What SpaceX has demonstrated is that there is room for a private space industry. Blue Origin and many others are actively pushing this frontier. Crypto, connected with non-state space initiatives suggests that network states, launch pads, and space enterprises can all develop into the space domain with smart contract guarantees, value facilitation, and data generation being handled and settle primarily on-chain and not through an existing centralized entity. 

## Why is Crypto Different? A Question of Design

There is one fundamental and clear cut reason as to why crypto rather than any other of these emerging industries operates as the general foundation for the others: It’s open and permissionless nature. 

Shoshana Zuboff documents quite well how the privatization of AI and ML expertise has created a division of learning within society, at great cost to the general public: 

_“The division of learning in society has been hijacked by surveillance capitalism. In the absence of a robust double movement in which democratic institutions and civil society tether raw information capitalism to the people’s interests - however imperfectly - we are thrown back on the market form of the surveillance capitalist companies in the most decisive of contests over the division of learning in society. Experts in the disciplines associated with Machine Intelligence know this, but they have little grasp of its wider implications.” (The Age of Surveillance Capitalism, page 190)._

In simple terms, the innovation inside of AI and ML has been closed off in its own tiny ivory tower hidden deeply inside of existing technology companies. And while some programming languages have been opened up such as MOVE or GO, the App store itself and the algorithms developed have not been made public for open-source innovation and iteration. 

In crypto - everything is done out in the open. Any open-source protocol cedes its ability to be forked by launching itself on a public blockchain. The system becomes complete, by allowing a community of users to participate, inhabit, and eventually govern the system. This is why a twelve year old in Thailand, and a 40 year old in Canada can work on the same protocol, or participate in the same DeSci project. Crypto’s design is fundamentally _open, accessible, forkable, permissionless, communal, decentralized,_ and _composable_- such that on the level of value, it is the optimal communication and synthesis technology for moving on from an era of fragmentation, siloes, and ivory towers. 

## Being Realistic About Blockchain Powering the Fourth Industrial Revolution

Characteristically, general purpose technologies accelerate the efficiency and proliferation of other technologies. But the development of general purpose technologies themselves - and their capacity to integrate across society - is a long and strenuous process that takes significant amounts of time. In the case of the steam engine it was over three decades from Watt’s original invention. And while crypto has leapfrogged its bottlenecks at the speed of software as opposed to hardware, it remains to be seen how long it will take to penetrate institutions and other industries in a manner that actually ‘catches’. 

## Important Takeaways



* **Caution With Enterprise Blockchain:** The idea of enterprise blockchain is much clearer than the ability for existing companies to readily incorporate such technologies into their business models. If early experimentation with Hyperledger and private blockchains for supply-chain management, fashion traceability, and shipping have demonstrated, it is that product market fit can take decades from the time the initial use-case has been conceived. To date (2023) Enterprise blockchain remains an extremely tricky and difficult niche of crypto that few if any entrepreneurs have successfully cracked open. 
* **Even if the Tech is ‘Ready’, The World Might Not Be:** If there is any example of being too early it is the sad story of the Leblanc and Solvay process. One ended up bankrupt and killed himself, the other profited immensely. The same chemical process was commercialized by both. However one was early, and the other was just on time. What this tells us is that oftentimes in cycles of innovation - the macro, external events - are catalysts  for the adoption and implementation of existing technology ‘on hand’. 
* **First Movers Are Likely Winners:** As we have seen with Uniswap, Aave, MakerDAO, GMX, Ethereum, and OpenSea - first mover advantage accrues significant market share and user-engagement, relative to copy-cat’s or iterations later on. This suggests that first-movers of innovation (particularly in the emerging technology stack discussed above), capable of building original blue chip products, have the most to gain from opening up a new market cluster. 
* **Will it all eventually go on-chain?** The idea that software is eating the world has been touted from the likes of a16z and Google for more than 15 years. The question for Web3 is _to what extent is the world going to move on-chain? _As it stands today, most industries and software systems can benefit from moving onto some form of distributed ledger (private, public, permissioned, permissionless). Some have gone so far to speculate that SAAS as a whole stands to be disrupted and unified in the coming twenty years by smart contracts networks (most likely between L1s). So while it is likely that most of our systems and industries will eventually move on-chain to some degree (Similar to how many things on-boarded to the internet since 2000), it is unclear the velocity of this change as well as the hotspots for innovation from it. 

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## Notes

[^1]:

     Mokyr, "Accounting for the Industrial Revolution," 1-2.

[^2]:

     Mokyr, "Accounting for the Industrial Revolution," 2. 

[^3]:
     Gregory Clark, “The Industrial Revolution: In Theory and History,” 6. 

[^4]:

     Joel Mokyr, "The Enlightened Economy: An Economic History of Britain 1700 - 1850" , The New Economic History of Britain, New Haven: Yale University Press, 2009, 125 - 126. and Clark, “The Industrial Revolution: In Theory and History,” 8.