Ex-Coinbase CTO Declares Legacy Economy Is Dying as Crypto Rules

TLDR

• Balaji Srinivasan, former Coinbase CTO, claims the legacy economy is fading as technology and crypto dominate the future.
• He highlights a growing stock gap between the Magnificent Seven tech giants and traditional companies.
• Srinivasan predicts that the next phase of economic development will focus on internet-based systems for economies, cities, and governments.
• He introduces the idea of Network States, online communities that could potentially replace traditional nation-states in the future.
• U.S. regulators, including the SEC and CFTC, are supporting the development of crypto and blockchain technology to modernize financial systems.

Balaji Srinivasan, former CTO of Coinbase, has declared the legacy economy is fading as technology and crypto rule. He emphasized the transition to an internet-first economy. Srinivasan’s remarks follow a post on X, urging the world to embrace the Internet economy. According to him, the global shift is inevitable and already well underway.

S&P 500 Stagnates as Tech Stocks Surge

Srinivasan highlighted a chart showing the significant growth gap between the Magnificent Seven tech companies and traditional businesses. These tech giants, including Apple, Microsoft, and Nvidia, have seen stock prices surge, especially in 2023 and 2024. In contrast, the broader S&P 500 index has remained stagnant since 2005.

The former Coinbase executive pointed out the 2008 financial crisis as the turning point. Since then, most transactions and communications have shifted online, laying the groundwork for the internet-first economy.

Srinivasan believes that this is just the beginning. He predicts that the next phase will involve economies, cities, and governments embracing the internet.

Network States and the Future of Nation-States

In his comments, Srinivasan also explored the concept of Network States, an idea he popularized. He argued that online communities might eventually rival or replace traditional nation-states. These online communities would likely rely on internet-based currencies, such as crypto, to function effectively.

https://x.com/balajis/status/1969608133531353516 

The shift towards crypto and blockchain technology is seen as a modern-day equivalent to the Industrial Revolution. Just as society transitioned from farming to manufacturing, Srinivasan believes the internet-first era is reshaping society.

Despite the promise of these changes, obstacles remain. Analysts point to the slow adoption of new technologies by financial systems and government agencies. They argue that outdated systems hinder innovation, delaying the full potential of tech and crypto.

Regulatory Support for Crypto and Blockchain Innovation

The U.S. government has started to support the development of AI and blockchain technologies. Regulators like the SEC and CFTC are pushing for changes to align the traditional financial system with the growing crypto sector. This includes a push for 24/7 capital markets that better reflect the global, always-on economy.

The U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission released a joint statement in September. The two agencies aim to connect traditional markets with crypto and blockchain technologies. Their effort includes clearer regulations for event contracts and perpetual futures, which are essential for the crypto sector.

Further collaboration between the U.S. government and blockchain-based oracle providers like Pyth Network and Chainlink aims to enhance transparency. These initiatives will allow for clearer economic data sharing through blockchain, particularly for public budgeting. 

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