The future of money and backbone of globalization 2.0 is the cost of consensus

As a seasoned blockchain developer with years of experience in Ethereum-based applications, I find myself captivated by the prospect of AI agents operating autonomously on decentralized networks. The idea of an AI spinning up a wallet on the Ethereum network and communicating with the world through tools like XMTP is intriguingly reminiscent of my own journey in this space.


Opinion by Ben Lilly, managing partner and head of research at Jlabs Digital

Contemplate the fundamental reason behind keeping assets such as Ether or Bitcoin: As you ponder before delving into further details, think beyond the common drivers like hedging and speculation. What other underlying factors might there be?

 

Why do you hold either cryptocurrency?

 

Let me request you to ponder over that question for a brief moment. To clarify, this question isn’t intended as a safeguard against global catastrophes like destruction of the world, hyperinflation, or seizure of assets.

 

While all those reasons are justifiable in their own ways, they are secondary. One holds Bitcoin (BTC) to pay for bytes of data stored on its blockchain. For Bitcoin, it’s being able to store some 1s and 0s in a block with consensus. That’s it. It’s digital private property stored in a block. It’s simpler to explain this new form of money by appreciating the basic reason we hold BTC — to pay for the data being stored in the block.

 

In contrast, Ether (ETH), Ethereum’s native token, serves as the payment method for computational services within the Ethereum Virtual Machine. Unlike staking, increases in value due to exchange-traded funds or as collateral for loans, it is primarily used to compensate the network for altering the state of the blockchain without prior consent.

But why is this important?

 

Globalization 2.0

ETH operates on a global, open-access, agreement-based network, where every transaction is broadcast and verified worldwide.

 

In any instance, the status of the network can be observed clearly. Every block validated functions as a picture capturing who possesses which assets. The principles governing property rights, universal across borders, allow anyone to check ownership of these assets anytime and for any reason.

 

Viewed from here, the network functions as a boundary-less worldwide platform for asset ownership, where adjustments in state necessitate compensations for the computational resources needed to execute those changes.

You pay for what you need.

 

Additionally, it functions as a decentralized system, allowing activities without explicit approval, thereby fostering economic growth. Interacting with applications doesn’t require any business contracts. This feature, known as permissionless, is instrumental to this modern form of money, as it encourages the increase in economic activity. It represents an innovation, empowering economic expansion by facilitating transactions more efficiently.

 

To further unpack this idea, let’s draw on the idea of globalization.

 

The idea of globalization refers to an open network where trade, information exchange, and technological advancements take place. Essentially, it’s a term used to describe the belief that our world is becoming increasingly interconnected and reliant on each other. This phenomenon primarily stemmed from businesses expanding their operations abroad and nations aiming to streamline international commerce more effectively.

 

This idea of interconnectedness and globalization stems from the creation of the United Nations in October 1945, which was the month after the formal end of World War II. The UN was an organization where countries could better cooperate and coordinate. Several alliances resulted from the UN, all with a similar goal of improving coordination and, essentially, consensus.

 

This team played a crucial role in establishing the groundwork for numerous peace treaties and trade accords throughout the latter half of the 20th century. Consequently, the subsequent years witnessed an unprecedented surge in global economic growth. The proportion of goods exported grew from a mere 8% of the world’s GDP to over 20% by the turn of the century. This collaborative effort led to the standardization of trade laws, the definition of property rights, and the formation of agreement on worldwide activities. This uniformity sparked economic expansion.

 

This means, that if these traits can be iterated on, expansion can accelerate further. These traits exemplify why a public, permissionless network like Ethereum is a foundational piece of technology that will help usher in globalization 2.0.

The future of money and backbone of globalization 2.0 is the cost of consensus

Currently, the technology driving such an interconnected organizational structure functions similarly to an expense. For entities such as the United Nations and its associated organizations, this expense is considerable, primarily encompassing costs for office spaces, resources, and personnel wages.

 

In this case, it implies a reduction in immediate expenses. Such costs could involve attending meetings beyond the company’s boundaries, where trade deals are established and collaborative structures are developed.

 

Beyond just governmental bodies, there are expenses that also exist within private entities like businesses. These entities often allocate funds and focus on influencing these organizations for their own benefit. When you tally up all these costs, it becomes strikingly clear that the price tag of global organization surpasses our ability to fully comprehend.

 

A public ledger might help to understand where the flow of money goes in such endeavors, but that isn’t the point. The point is that a system that can better facilitate global organization and that consensus is incredibly valuable. 

This action could lead to a significant increase in efficiency. For a clearer understanding, let’s delve into the latest craze sweeping through the crypto world now.

 

Onchain AI agents

Truth Terminal is currently leading the way as a trend-setting AI. It interacts through social media platforms, captivating everyone’s interest. Its connection to cryptocurrency lies in its investment in a digital coin, which sparked intense speculation about the coin and consequently increased the value of the AI itself.

 

As a crypto investor, I’ve been intrigued by the advancements in AI and its impact on our space. However, the recent AI experiment has shown us that we’re barely scratching the surface when it comes to on-chain AI agents. This AI was granted Bitcoin as a means to enhance its abilities, which it then utilized to amass followers via a popular X social media platform. It also showed support for a coin on the Solana blockchain, demonstrating some level of autonomy. Yet, human intervention was essential at every juncture. In essence, we’re still navigating the early stages of what AI could potentially achieve in the crypto realm.

 

To get the incoming Bitcoins, a person had to create a Bitcoin wallet first, then convert those Bitcoins into US dollars, establish their X account, assist in creating an account for enhanced computational requirements, and perform other tasks.

 

As we delve into understanding its functions, it’s quite restricted. There’s a gap between the AI’s digital realm and the broader world. However, upon examining certain cryptographic tools, we notice that these restrictions might lessen, allowing the AI to expand its abilities and even initiate economic activity independently.

 

I understand some might find this instance less than ideal due to my choice of Ethereum, but that’s perfectly fine. You can certainly substitute it with your preferred layer 1 technology. Since I’m more accustomed to Ethereum-centric applications, let me explain how an AI could establish a digital wallet on the network. This wallet serves as its foundation for interacting globally. In this scenario, the XMTP protocol is a valuable resource, as we currently utilize it for our on-chain AI at Jlabs Digital.

 

The wallet serves as both the voice and identity for the AI, holding its personal details and functioning as its base platform. It may also have an identifier in the form of an Ethereum Name Service (ENS), enabling it to establish a unique website using tools like Eth.limo, such as Eth.limo. This provides the AI with a verifiable identity that it can use for its operations online.

If additional GPU capacity is required by the AI in the future, it can seek out markets that offer higher capacities when demand warrants. Currently, there are some restrictions, but these are gradually being removed, enabling an AI agent to increase its computing power autonomously. At this stage, the AI possesses a digital wallet, communication protocol, and even a website for this purpose.

 

From here, it’s able to set up ways to accept payment on its website for whatever services it might sell. It may even start constructing gated channels for communicating with those who have paid for its service. It may seek out additional models to train on to improve its service offerings (not sure of one on Ethereum, but Cosmos SDK and Bittensor exist).

 

Without human control, AI is autonomously expanding, generating, and stimulating economic activity. It’s almost as if these AI agents are independently managing transactions on the internet or engaging in market activities like forecasting, betting, or speculation. However, I want to emphasize that what we’re discussing here is the self-propelled growth of the economy, driven by AI.

 

In this scenario, as we observe emerging areas such as decentralized physical infrastructure networks (DePIN), artificial intelligence may find opportunities to study satellite images for improving traffic predictions within a specific city. Subsequently, it could suggest optimal routes to self-driving vehicles based on these forecasts.

 

Suddenly, the need for things that Eigen Layer is building to facilitate actively validated services (AVSs) becomes interesting, and even the ability for an AI to spin up a layer 2 on its own in a matter of minutes starts to gain importance — especially when we realize how composable the yield can be when onchain AI agents start to populate the chain.

The future of money and backbone of globalization 2.0 is the cost of consensus

Disregarding the challenging construction process, it’s intriguing to ponder these potential scenarios about on-chain AI agents, but let’s focus on something else in this context.

 

The point is we are moving closer to an environment where a system of permissionless consensus that’s borderless becomes ever more pressing. It’s how globalization 2.0 gets ushered in. And it’s a realization that nation-states embracing this foundational network will be able to boost productivity.

 

The network provides significantly lower obstacles for operation, with every added barrier reducing efficiency. To maintain its effectiveness, the structure should stay open to all participants, as each level of restriction adds expense. In a transparent cost environment, these savings can be shared worldwide.

 

Margins that can be expressed in a network economy’s price level.

 

As a forward-thinking crypto investor, I firmly believe that the economic landscape of tomorrow will usher in an upgraded era of globalization – Globalization 2.0. At its core, this new world economy will be fueled by a universal currency, one that remunerates the computational workings of the system itself. This digital tender represents the future of our financial systems – the price we pay for collective agreement and consensus.

This write-up serves as a source of general knowledge and is not intended to be interpreted as legal or financial advice. The ideas, perspectives, and opinions expressed within this piece are those of the author and do not necessarily align with the views or opinions held by CryptoMoon.

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2024-11-07 00:17