tl;dr: Power is historically viewed solely through the lens of geography. Today, another dimension to economic power is on the rise. Network power.
There were a number of articles around the end of March proclaiming that the “long-awaited Asian century is set to begin next year.”
It’s a very compelling thesis and the evidence is quite strong, to be sure.
However, as I read through the articles, I couldn’t help but wonder if the premise was outdated.
For millennia, economic power was vitally linked to geographic power. Rome, Spain, Britain, the US, etc.
Given how vast Asia is, and the extremes within it, calling Asia the “economic superpower,” is attractive, but also misleading. When you have places like Yemen and Bangladesh within Asia, you’re not really at superpower status yet.
There are poor people in the US, of course, but the poverty in Appalachia is nothing compared to the poverty in Sanaa or Dhaka.
This is not meant to discount the economic power of Asia as a region, by any stretch. It is meant to highlight the idea that, in the next century, economic power will not be defined by geographic region.
Who Has Access to Markets?
This thought process was actually triggered by a small announcement from UMA Protocol.
You may remember them from a previous post, but the gist of this new product is a crypto-based synthetic investment asset that allows anyone, anywhere to buy the S&P 500 Index.
For Americans who might be reading this post, this doesn’t seem like a big deal. But for people outside of the US and, particularly those who may not have a brokerage account, it represents something fascinating.
It is easy to forget when you live in a big market, that that there are hundreds of millions of people who do not have the same financial access as you take for granted.
The difference, imho, between the dot com revolution and the crypto revolution is that this time around, all you need is a phone to participate. Last time you needed much more.
Crypto is more than a technology, it represents an idea.
The idea is that decentralization of economic power is healthier, providing greater resiliency to the overall network.
The Decentralized Century?
Asia as a geographical location is certainly growing as an economic power, but that is just one dimension, given the technology substrate that exists today.
For all of his crazy shenanigans, Jeremy Gardner does have a strong track record as a crypto innovator. He’s investing in Miami, but only as a gateway to Latin America, as he says:
“Latin America is the region most likely to be impacted by blockchain,” says Gardner, explaining that it has both the infrastructure (internet, electricity) and the need (hyperinflation, weak governments). Gardner views Miami as a gateway to Latin America, and the Crypto Castle is his gateway to Miami’s influencers.
Sound familiar? This is the Crypto-Bolivar thesis.
And it is not just Latin America.
There are plenty of areas of crypto innovation around the world.
Nodes not Nations?
I suppose the point of all of this is to challenge the orthodoxy of geographic-based economic power.
Land, place, and physical proximity certainly matter a lot. There are plenty of advantages that will accrue on that dimension alone.
However, what the Internet (first) and crypto (second) enable is a completely new way to create economic power that is location-independent.
Measuring GDP by geography is nice, but will it soon be recognized as an outdated model, based on an industrial age mindset?
Will we soon see GDP measured by network value?
I think we could.
Nodes in valuable networks will create more value than nodes in less valuable networks.
To make it clear, think of it like this.
NYC, London, Frankfurt, Hong Kong, Tokyo are all nodes in the very valuable financial network.
Akron, Lordstown, Rouge River, Flint, and Youngstown are all nodes in the US automobile network.
Geography matters and will, probably forever, but it’s not the only thing that matters anymore.
The Asian Century is upon us. Ok. So is the Network Century.
The Asian Century and the Network Century was originally published in Data Driven Investor on Medium, where people are continuing the conversation by highlighting and responding to this story.