Innovations in economic agents’ ability to specialize have so far gone through three distinct eras which we coin as the Protocol Era, the Smart Contract Era and the Interoperability Era.
- Protocol Era (2008–2013)
The protocol era peaked with Bitcoin as the dominant cyberspace economy with its relatively simple economic agents. In this era there were significant barriers to introduce new classes of economic agents (Script). Additionally in this era there were significant barriers to changing the rules of the economy (forks). These drawbacks were a major driver for the emergence of alternative cyberspace economies, with altered protocols and new classes of economic agents.
- Smart Contract Era (2014–2019)
The smart contract era peaked with Ethereum as a dominant cyberspace economy. This era provided solutions to drawbacks of the protocol era by lowering the barriers to introduce new classes of economic agents and by enabling the creation of sub-economies within the larger cyberspace economy. The Ethereum Virtual Machine (EVM) and its programmable smart contracts spawned an explosion of new specialized economic agents (smart contracts) and sub-economies (tokens). More importantly, this era brought so-called intraoperability: i.e. interoperability between these sub-economies but still within the boundaries of the larger cyberspace economy. Limits to the capacity of smart contract platforms (cost, throughput) were a major driver for the emergence of alternative smart contract blockchains, again with altered protocols and again with new economic agents.
- Interoperability Era (>2020)
Most blockchains so far have been (and will remain) in a complete state of autarky. Autarky is the characteristic of self-sufficiency; the term is usually applied to political states or their economic systems. Autarky exists whenever an entity can survive or continue its activities without external assistance or international trade. If a self-sufficient economy also refuses to conduct any trade with the outside world then economists may term it a closed economy.
There are clear signs of major innovations in the blockchain industry that allow cyberspace economies to become more open economies. An open economy is a type of economy where the domestic community and foreign communities have trade in products (goods and services).
The main benefit of open-economies is foreign trade (importing and exporting). In the context of blockchains, this implies a blockchain’s ability to sell goods or services to another blockchain and to buy goods and services from another blockchain.
A number of projects are making significant progress towards more open cyberspace economies through working on blockchain interoperability. At Polkascan Foundation we believe that Polkadot holds the best cards to dominate the interoperability era by fostering specialized cyberspace economies and by fostering the broadest foreign trade mechanisms imaginable between these specialized cyberspace economies.