According to Balaji Srinivasan, a former executive at the cryptocurrency exchange Coinbase and author of the book "The Network State," traditional economies are being gradually phased out in developed countries transitioning to an internet-first economy, which is dominated by the tech industry and digital platforms.
"Traditional economies are being replaced by internet economies," Srinivasan posted on the X platform on Saturday.
He shared a chart showing the price divergence between the "seven major tech stocks" enjoying rapid growth and the rest of the companies in the S&P 500 index, which has remained relatively stable since 2005.
The S&P 500 index is a core economic benchmark, a weighted stock market index of the 500 largest companies in the U.S. stock market by market capitalization. Srinivasan stated:
The seven major tech stocks include consumer tech giants Apple and Microsoft, online marketplace Amazon, Google's parent company, social media and augmented reality company Meta Platforms, high-performance computer chip manufacturer Nvidia, and electric vehicle manufacturer Tesla.
Srinivasan promotes the concept of the network state, which is a distributed online community that he believes will one day replace traditional nation-states.
These network states will need to exist in the form of internet-native currencies in cryptocurrency, representing a key shift in human history, similar to the transition from an agricultural economy to a manufacturing economy during the Industrial Revolution.
Traditional financial systems and national governments often act slowly in embracing new technologies, which can stifle technological innovation.
However, U.S. regulators and lawmakers are currently pushing for the research, development, and integration of artificial intelligence and blockchain technology to modernize the financial system.
In September, the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) issued a joint statement suggesting a shift towards 24/7 capital markets to keep the traditional financial system in pace with the round-the-clock trading of cryptocurrencies.
The U.S. government is also utilizing oracle providers Pyth Network and Chainlink to publish government economic data on-chain to enhance budget transparency and accountability to the public.
Related: The Bank of Canada calls for a stablecoin regulatory framework, or it will be "crushed."
Original text: “VC Perspective: Traditional Economies Are Being 'Phased Out,' Internet Economy Rises”
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