Revolutionizing Our World: Blockchain, AI, and Digital Assets Unleash the Future!
Abraham George Macro Musings
In the past five years, I have delved extensively into macroeconomics, market dynamics, evolving technologies, and central bank policies. If you're interested, subscribe to Breezy Briefings and get access to nearly three years' worth of my previous writings.
With close to five decades of experience in the markets, I possess a profound historical perspective and firsthand encounters with major political, social, technological, and market transformations. Regular readers might have observed my persistent emphasis on the fact that we stand at the precipice of significant changes that will reshape our communal and species-wide existence. These changes permeate every facet of our lives, often overwhelming our capacity to fully grasp their significance and magnitude.
It bears repeating that these changes will not transpire overnight; rather, they will unfold gradually, their impact often concealed from our immediate awareness. My primary focus revolves around digital asset innovation and the transformative power of data. It's important to recognize that data transformation and adoption are protracted processes.
The journey from the inception of a new technology to its mainstream acceptance can span anywhere from 25 to 30 years. This historical trend stands as evidence, and it reveals that adoption periods tend to shorten as subsequent technologies build upon their predecessors. Take, for instance, the radio, invented in 1890 but not commercially available until 1920. Similarly, television emerged in 1920 but didn't grace our homes until 1950. Email, developed in 1969, didn't become a widespread communication tool until 1997. The TCP/IP (Internet) protocol, introduced in 1970, wasn't commercially accessible until 1995 with the release of Windows 95. However, it took until 1983 for TCP/IP to gain recognition as the standard protocol for internet development—thirteen years after its invention.
The revolution in digital assets commenced with the introduction of Bitcoin in 2009. Since then, a myriad of projects has emerged, some without clear use cases but others strategically designed to revolutionize numerous aspects of financial management and enhance productivity. Blockchain and artificial intelligence serve as the focal technologies driving these transformative changes.
Artificial intelligence recently surged to the forefront, propelled by the advent of ChatGPT and similar technologies. This isn't to say that we weren't utilizing AI prior to this period, but the last six months have offered us a glimpse into what lies ahead. The latest advancements in AI are already facilitating a transition from merely utilizing large language models to adopting a product and service model. This shift is poised to unleash unprecedented growth, with profound implications for productivity. While immediate effects might include inflationary pressures, the ultimate outcome will be a significant boost in productivity.
Within a span of two weeks, the ten-year bond yields have surged from 3.25% to 3.85%. The Nasdaq has also reached a new yearly high. Suddenly, the market no longer factors in the possibility of a rate cut by year-end and even entertains the idea of another hike on June 14th.
The recent price surge in NVIDIA following its earnings report was truly extraordinary. Throughout my entire career, I have never witnessed a major company's stock price rise by 25% in a single day. NVIDIA, now the fifth largest company in the US, nearly attained a market capitalization of one trillion dollars. It won't be surprising if it eventually surpasses the likes of Microsoft and Apple, especially considering their involvement in manufacturing the highly sophisticated chips demanded by the AI industry.
Regarding other digital assets, their trajectory follows a similar playbook to the dot-com bubble. Thousands of companies emerged during that era, but only a select few emerged victorious. While many industry leaders of that time, such as Netscape, Napster, and pet.com, ultimately failed, companies like Google, Apple, Amazon, NVIDIA, and Netflix emerged triumphant. Their success largely stemmed from their contributions to the second stage development of the internet, commonly known as Web 2.0, which centered around information dissemination. Today, we find ourselves in the era of Web 3.0, and the primary driving force behind this new wave of progress is blockchain technology. Its disruptive nature poses significant challenges to the banking sector, which will undergo profound transformations within the next five years.
Currently, there are approximately 23,000 cryptocurrencies or digital assets in existence. However, it is essential to recognize that over 99% of these so-called companies will either vanish or be acquired by more established firms due to their superior technology. Decentralized finance (DeFi) and the tokenization of various assets will shape the future landscape.
As digital assets strive to establish standard protocols and gain regulatory clarity, we can anticipate institutional and enterprise adoption to take hold. This will usher in the era of the Internet of Value, enabling seamless and frictionless transformations in the realm of monetary transactions.
A case currently underway between the Securities and Exchange Commission (SEC) and Ripple possesses the potential to be a game changer for the digital asset industry. In fact, it could even rival the magnitude of the Watergate scandal. As the Hinman emails become public on June 13th, intriguing revelations are expected to surface, further shaping the future landscape.
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Abraham George is a seasoned investment manager with more than 40 years of experience in trading & investment and multi-billion dollar portfolio management spanning diverse environments like banks (HSBC, ADCB), sovereign wealth fund (ADIA), a royal family office, and a hedge fund.