How are Crypto and Artificial Intelligence Shaping Digital Economy?

From the 1990s onward, there have been many predictions regarding the future of internet, finance, and technology improvements. Many have underestimated how important these advancements will become but even those who were the most enthusiastic didn’t expect how fast these changes will take place.
So, let’s look back on how cryptocurrencies and artificial intelligence have shaped the digital economy we live in in the past few years.

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crypto digital economy

Illustration: MilicaM

Crypto Market is Capital Market 2.0 

Our understanding of the economics of cryptocurrency and private fiat-backed stablecoins is too limited to allow for projections about their macroeconomic impact. This leaves policymakers with uncertainty as to which regulatory approach will yield the greatest benefit. 

The World Economic Forum published a report “The macroecnomic impact of cryptocurrency and stablecoins” in July 2022. A majority of economists interviewed predict that allowing cryptocurrency to play a regulated role in the economy will bring the highest net benefit to society. 

Financial advisor and co-owner of FIMA Group Milan Horvat believes that digital economy has generated so many novelties in business forms and has improved efficiency. 

“The crypto market is capital market 2.0. There are always some old functions that are lost and are no longer needed or interesting, while some are retained with improvements. Likewise, not all innovations are adopted. However, banks that do not include FinTech will not survive in the long run because they do not have their own resources to keep up with the technology,” explained Horvat at the Business Talks Network WebCON23. 

He pointed out that the existing gap is understandable since we’re talking about two different cultures – traditional banking and FinTech. 

The way he sees it, another differentiation lies in how you perceive those included: 

“In the traditional industry, we have stakeholders, who know exactly what their share is. In crypto, we have a community and everything that we do is perceived as a joint project,” Horvat said. 

To better understand the future of finance and the impact of cryptocurrencies, we need to divide them, according to their function, into three categories: 

  • Payment tokens – Tokenized assets are something that previously existed, but are now in a new way brought closer to people for mass use; 
  • Utility tokens – They provide a certain quality in the work of the company related to the crypto project, application, service, on which, as a rule, a significant number of people work; 
  • Assets tokens – Digitized assets in the form of tokens that hold value. This is the future of the financial industry, tokenizing all key assets. 

As Horvat emphasized, crypto can have all of these features but what’s important is which one is the most dominant. 

The economy of artificial intelligence 

Nowadays, everyone seems to have an opinion of artificial intelligence. That’s mostly due to ChatGPT entering many households and claiming to be the necessary tool of the future, regardless of the industry. 

As financial consultant and investor Vladimir Đukanović pointed out, this discussion that was taking place on obscure forums a few years ago has now been brought out to mainstream media. 

“The main discussion among artificial intelligence philosophers today is whether these machines will become self-conscious or not. We have two schools. One says they will never be aware of themselves, and the other that says otherwise. When they become aware of themselves, this is the moment when they will begin to independently decide on the tasks ahead of them. However, I argue that it is not so important whether they are conscious or not, because in classical science we do not even know what consciousness is, how it arises and to what extent we or animals have it. Discussing whether or not machines will become conscious is pointless for now. It is much more important to listen to those who demand that AI be regulated by law,” stated Đukanović at the Business Talks Network WebCON23. 

Regarding the ever-growing fear of AI replacing many workplaces, he again repeated what true AI experts have been claiming since the beginning of ChatGPT hype – that automation isn’t necessarily a bad thing, quite the contrary. 

“Technology has never destroyed important jobs or created less valuable jobs. The old workplace is destroyed relatively slowly, and instead a series of more sophisticated jobs are created, where workers create more value within society and thus earn more,” Đukanović explained, adding that the fear of AI replacing workers has always been unjustified and exaggerated by the media. 

In his opinion, although we shouldn’t fear automation, there are other things to worry about. 

“Job automation has always had a positive effect, but what scares me is the speed of AI development. It shows me that this change will not be so slow. Why is that a problem? If a lot of jobs are destroyed quickly, the economy will collapse, because people will not receive wages, they will not spend and GDP will fall,” the financial consultant warned. 

However, in order to be ready for the change, people worldwide need to be ready to accept employee retraining. The best way to do that, in his words, is to predict a new workplace. 

“Before, we would graduate and more or less know what we would be doing until retirement. What is important for the younger generation today is that they need to be ready to undergo retraining. If you can predict a new job, especially in the service industries where communication is important, you will make money. For example, how to attach ChatGPT to an application, which can be made for a relatively small amount of money and works equally well in different languages,” he suggested, adding that those who avoid AI will work twice as hard for less money. 

And finally, while technology is rapidly progressing, the state administration is lagging, so the global focus needs to be on legal regulation. Moreover, we can expect further progress in hardware since it needs to keep up with the sophisticated software. 

A journalist by day and a podcaster by night. She's not writing to impress but to be understood.