How will decentralized finance change the future of economics?

The future decentralized finance:

In the business world, adds the founder of the Visual Capitalist website, technological transformation is the most obvious way to drive change in markets. But the new consensus in this area can also be driven by people (such as Steve Jobs, Warren or Jeff Bezos); by innovative models (such as SpaceX, Uber or Spotify); decentralized app developer by changes in the mentality of consumers (such as the inclination towards renewable energies); or by changes in the balance of economic influence in the world (such as the rise of China). And it can come from the hand of economic growth in Africa, the explosion of cryptocurrencies , the pervasiveness of artificial intelligence, the green revolution, or anywhere else, the editor points out.

In this article we select some of the forces that will change the future of the economy, according to the information contained in the book.

1. The invasion of the tech giants

For decades, the world’s leading companies had an industrial focus on large-scale serial production or extraction and processing of natural resources.

This is the case of firms such as Ford , General Electric, Exxon or Mobil.

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Over time, companies dedicated to finance, telecommunications or the sale of products in the retail sector entered the top ten of the companies with the highest market value.

But today technology and commerce have come together in such a way that information has become more valuable than physical assets.

The paradigm shift has accelerated at such a speed that in the last five years the list of the largest publicly traded companies has changed radically, as this graph shows.

2.Increase in the speed of Chinese growth

Although it is not something new, what is striking is the speed with which the Chinese economy and technological development are advancing.

China currently has cities whose economic productivity is greater than that of entire countries.

In fact, the country has more than one hundred cities that have more than one million inhabitants. They have been developed on the basis of the creation of factories, decentralized application development the extraction of natural resources or the handling of data.

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An example is the development experienced by cities around the Yangtze River, where Shanghai, Suzhou, Hangzhou, Wuxi, Nantong, Ningbo, Nanjing and Changzhou are located, which together have a Gross Domestic Product (GDP) of US$2.6 billion, higher than Italy .

For now, calculations indicate that between 2017 and 2019, China will be the economy with the highest growth rate (35.2%) and that around the year 2030, it will surpass.

3. The rise of megacities

In the coming decades, population growth in cities will transform the global economy.

Projections suggest that Western countries and China will see a stabilization of birth rates, while African countries and the rest of Asia will experience a population boom and rapid urbanization.

This well-studied phenomenon is known as the rise of megacities.

By the end of this century, Africa will have at least 13 megacities larger than New York.

4. The rise in debt

It is estimated that there is an accumulated debt of more than US$240 billion in the world, of which US$63 billion are owed by governments.

The United States, Europe and some emerging economies have increased their level of debt in recent years, taking advantage of the cycle of low interest rates.

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The US has recently increased its level of debt, while the country’s fiscal deficit continues to grow rapidly.

As a percentage of Gross Domestic Product (GDP), Japan has a debt of 253%; United States of 105%; Spain at 98%, the United Kingdom at 85%, Brazil at 74% and Mexico at 46%, to name a few examples.

And at a global level, the countries that accumulate the most debt compared to the others are the United States, Japan and China.

5. The speed of technological change

Great technological innovations in modern history were, for example, the creation of electricity, the telephone, the car or the plane.

The massification of these products took, in some cases, several decades, considering the time elapsed between the first prototype and a wide adoption of the product by consumers.

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It is estimated that in the case of the car it was about six decades; from the phone, five; and credit cards, more than 20 years.

Today, however, the time it takes for the market to adopt a new technology can be just a few months.

6.Trade barriers

After World War II, the world has tended to progressively eliminate trade barriers between countries.

However, this trend has recently been challenged by countries like the United States, which, in 2018, applied tariffs to various Chinese products, unleashing a million-dollar trade war between Washington and Beijing.

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The question in this regard is whether the world will continue to move towards free trade or whether new rules of the game will emerge in trade relations between countries, blockchain dapp development company a phenomenon that the book describes as the “commercial paradox.”

7. The green revolution

The growing use of renewable energies has accelerated in recent years, as production costs decrease and technologies advance.

Some projections indicate that in two decades, solar and wind energy will occupy almost half of the installed electrical capacity in the world.

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Others point out that by the year 2047 there will be about 1,000 million electric cars traveling around the world.

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