In today’s fast-paced world of technological advancements, innovation is not merely a buzzword; it’s the engine driving our modern economy. Every interaction with our smartphones or an online purchase is a testament to the remarkable impact of technology. The rise of crypto assets and blockchain technology opens a new chapter for the digitalisation of the City of London and the UK economy, offering unparalleled opportunities for innovation, investment and inclusive growth.
Technology and tokenisation
Digital innovations were an essential part of paradigm shifts that drove the growth of the City in the 1980s. Today, the City requires the same technological catalyst to drive the next big shift in efficiency. Capitalising on the potential of blockchain and crypto technologies could kickstart a new wave of growth and innovation for the UK. Digital assets and tokenisation of real-world assets can broaden investment opportunities (such as through fractional ownership) and enhance the competitiveness of the UK’s capital markets.
Furthermore, digitally native money, in all its forms, has the potential to revolutionise payments, and a mixed payments ecosystem that includes a flourishing stablecoin market will deliver many benefits to UK consumers. The programmability of stablecoins provides scope to automate how and when transactions are made and settled (for example, micropayments, salaries, subscriptions, tax credits and benefits). That level of control will give government and commercial enterprises important alternatives to existing payment networks and with digital innovation throughout global commerce accelerating, a peer-topeer mechanism to transact and exchange value on the internet is needed. Stablecoins make it possible to send money to anyone, anywhere in the world as easily as sending a text message and will improve financial inclusion.
Future of the internet
Progressive economies should strive for an internet that fosters competition and mitigates the dominance of large technology companies, unlocks opportunities in the innovation economy, and enables people to take control of their digital information.
Web1 was the first iteration of the internet, largely read-only with simple web pages. It was followed by Web2, or the “read-write” era, which drove easy internet access through widespread fast internet and smartphones. Here, we’ve seen commercialised user-generated content networks and the dominance of a few big, centralised platforms, particularly in social media.
The third generation of the Internet, Web3, is the solution to the problems of Web2. Blockchain technology is inherently permissionless and decentralized, ensuring no single entity is dominant and giving individuals power over their data and content.
Decentralisation
Decentralisation is the core feature of Web3 systems, offering many benefits.
Fundamentally, decentralisation ensures that blockchain networks function as shared public infrastructure – encouraging developers to build on those networks, thus lowering the barrier to entry for entrepreneurs wishing to build new businesses. Since decentralisation requires broad distribution of control, it also ensures that the benefits of Web3 systems accrue to users and not just large companies.
By spreading power across an ecosystem of stakeholders, flexible decentralised technologies can create the checks and balances necessary to safeguard ownership and enable users to build more equitable systems.
Given the benefits of decentralisation, governments must understand its novel characteristics and create well-calibrated rules that incentivize it.
The UK’s opportunity
The global flow of capital consistently seeks the most promising opportunities. Nations are in perpetual competition to attract this “innovation capital”. To become or remain a hub of innovation, governments must create an infrastructure conducive to nurturing and attracting top talent and transformative ideas.
Many jurisdictions have struggled to develop regulatory clarity for Web3, or worse, attempted to apply legacy rules that do not fit the technology. By contrast, the UK is already making significant progress in developing regulatory clarity for the crypto asset sector, attracting investment and innovation. Indeed, over the past five years, the number of developers working in UK time zones has seen a noticeable increase.
With deep reservoirs of talent and capital, sophisticated regulators, leading academic institutions, and a robust entrepreneurial culture, the UK is poised to seize the opportunities of this next phase of this technological revolution, driven by Web3.
The path forward
Blockchain technology is an underlying technology that can drive innovations across all sectors of the economy; we are seeing blockchain-based innovations in the fields of telecommunications, supply chain tracking, transport, event ticketing and many more. Increasingly, small business entrepreneurs are solving society’s problems through the blockchain, unlocking investment up and down the country, and driving jobs, growth and innovation in local communities across the UK economy.
For economies to thrive, innovation should be the default mode, where entrepreneurs are empowered and encouraged to explore and create.
This is a form of “permissionless innovation”, exemplified by the digital assets revolution. Crypto assets challenge a world where financial and labour markets Advertorial In partnership with are siloed into regional jurisdiction, symbolising a decentralised approach to innovation. Crypto assets enable financial inclusivity, allowing people from all over the world to access financial services, breaking down barriers that have prevented direct, secure, and uninhibited economic participation for so long.
Societies that celebrate disruptors, visionaries and creators often lead in global progress. This requires a shift towards long-term thinking, acknowledging that while innovation may cause short-term disruptions, its long-term benefits have the potential to redefine economies.
Let’s heed the cries of would-be entrepreneurs yearning to make their mark. We should recognise and support their aspirations. Embracing a culture of permissionless innovation empowers an entire generation dedicated to evolving our economy for an inevitably digital future.
