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Definition

blockchain economy

The blockchain economy is a scenario and potential future environment in which cryptocurrency replaces current monetary systems, potentially on a global basis. Although blockchain is most commonly associated with the Bitcoin cryptocurrency, the technology is actually a distributed ledger that keeps track of transactional data in a secure, verifiable and permanent manner. No central authority is required to validate the accuracy of transactional records; instead, trust is established and maintained through consensus within a peer-to-peer (P2P) network.

This has profound implications for the future of banking and the exchange of value. Blockchain's peer-to-peer system of exchange is inherently self-governing; based on shared ownership and equality among participants. Because P2P transactions through blockchain don't require the help of an intermediary, it lowers the cost of each transaction. Additionally, the consensus algorithms used to validate the accuracy of the distributed ledger make blockchain much less vulnerable to fraud and cybercrime than conventional banking systems.

Blockchain's autonomy is also expected to foster another emerging aspect of the blockchain economy, machine-to-machine (M2M) transactions. In this scenario, machines will use blockchain to become autonomous market participants with their own bank accounts. Before long, it's expected that advances in artificial intelligence (AI) will allow machines in the Internet of Things (IoT) to be able to lease themselves out, schedule and pay for their own maintenance, purchase their own replacement parts and keep their own transactional records, using blockchain.

Bettina Warburg explains how blockchain will radically transform the economy:

This was last updated in April 2018

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