How Crypto Is Shaping the Digital Revolution

  1. Providing a brief theoretical outline of the two main stages of technological revolutions;
  2. Comparing the organizational and institutional shifts of the previous revolution (centered around oil, automobiles, and mass production) with those of the current one (centered around digital information and communications technology) as imagined during the dot-com era (late 1990s, early 2000s); and
  3. Discussing how ’crypto’ as a techno-populist reform movement and innovation cluster is shaping global institutions and governance as the Digital Revolution matures.

From Installation to Deployment

A popular model for theorizing economic development is that of wave-like cycles. There are many variants of this approach, each focusing on a different set of change drivers, including demographic, credit/debt, trade, and political cycles. In innovation economics, with roots in the work of Joseph Schumpeter, the main emphasis is put on entrepreneurship and innovation.

Figure 1: Life cycle of a technological revolution (adapted from [1], p. 30)
Figure 2: Three spheres of reciprocal change in technological revolutions (from [1], p. 156)

Deployment of Mass Production vs. ICT Revolution

There are two primary forces that shape the deployment stage. First, the continued iteration and mass adoption of the core innovations of the revolution that establish the new paradigm in everything from production methods and business organization to consumer lifestyles and social institutions. And second, public policies in reaction to the challenges and opportunities created by the revolution. Although separate, these two forces are in constant interaction: the invention and adoption of new technologies affects policymaking, which in return shapes the evolution of technology, and especially the social distribution of the costs and benefits of innovation.

Table 1: Differences between the mass production and ICT paradigm [7]

Crypto and the ICT Revolution

Attempts at defining the core innovation and societal significance of crypto are often compared to the parable of blind men and an elephant — a situation in which a complex phenomenon is described from different but limited perspectives. The most common interpretations can be divided into two categories, sometimes referred to as ’money crypto’ and ’tech crypto’. The first focuses on the impact of crypto on money and finance, and especially its potential to undermine the role that national governments and other centralized institutions have traditionally played in these areas. The second interpretation is even more ambitious, focusing on the impact of crypto on any digital system or service that might benefit from higher transaction execution guarantees, or a more decentralized, secure, and user-centric model for administering information.

Crypto as techno-populism

Historically, the mid-stage turning point of each technological revolution has been a time of heightened controversy and antagonism between different visions of the appropriate path forward. Financial and economic crises often lead to the questioning of the existing institutional order, widening the Overton window for fundamental reform. Turning points thus provide favorable conditions for political and social movements to tap into popular dissatisfaction with the status quo.

Crypto as financial innovation

From a strictly financial perspective, crypto appears — at least on the surface — to contradict Perez’s idealized version of deployment in which highly speculative and self-referential forms of finance diminish in comparison to those that are more tightly coupled with the production of real goods and non-financial services. However, there are at least two reasons why using this frame is too limited to analyze crypto and the context in which it has emerged. The first focuses on the relationship between financial and production capital, and more generally the adoption and real-economic effects of ICT since the early 2000s, while the second frames crypto-financial innovation as entirely consistent with — and indeed, explicitly anticipated by — Perez’s theory.

  • Traditional regulatory action, which may both encourage and hamper crypto’s growth, and will likely continue to be targeted at centralized service providers such as fiat on-ramps, custodians, and exchanges, but also at companies closely involved in the core software development or marketing of specific crypto-financial protocols and services.
  • Crypto as a forcing function that drives traditional financial and regulatory institutions to explore new technologies and organizational models, the best examples of which are the growing interest in central bank digital currencies (CBDCs) [25] and attempts to integrate crypto with traditional finance and real-economic processes.
  • Crypto as an expression of ‘code is law’ — the idea that software can replace traditional legal codes, not only by providing the basis for law as legal text, but increasingly also in terms of administration and enforcement by determining the types of actions possible in a world saturated by digital technologies. Behind the apparently anti-regulatory stance of crypto, there is also a vision of a world highly regulated by software protocols — the digital equivalents of bureaucratic rules of procedure. [26]

Crypto as process and institutional innovation

The diffusion of a technological revolution is a multi-decadal process, involving numerous revolutionary technologies around which clusters of innovative activity expand and mature at different points in time. There are core, general-purpose technologies that are iteratively improved upon throughout the revolution (digital computers in the case of the ICT Revolution, for example), but also a whole range of disruptive technologies that emerge only after earlier ones have sufficiently matured (public Internet, cloud computing, and smartphones, for example). Meanwhile, as the revolution progresses, many technologies become commodified, unit costs come down considerably, and growing parts of the population not only learn to rely on the new capabilities enabled by technological innovation, but begin perceiving it as the only ’normal’ way to live, work, and organize in contemporary society.

  • The open and permissionless nature of public blockchains makes them comparable to public infrastructure or utilities. However, whereas most public infrastructure is fixed in a specific location and is often either directly or indirectly controlled by democratically accountable institutions (i.e. government), crypto as digital infrastructure is inherently global (the closest existing analogue being the Internet) and controlled — decentrally — by the private sector. That does not mean that individual networks or services can’t or won’t have a relatively larger footprint in specific geographies, or that democratic checks and balances or accountability are fundamentally incompatible with crypto. But, in principle, crypto has a global reach from the outset (contingent only on access to the Internet) and is explicitly designed to be resistant to centralized control, either by government or any other group or organization. [30]
  • Similar to the impact of crypto on finance, its entrance into other institutional fields presents a direct competitive challenge to, and is likely to trigger reactive changes within, incumbent institutions. From the point of view of the incumbents, this is best encapsulated in asking the question: “What is our crypto strategy?“
  • Crypto creates a very open and dynamic environment for running digital governance experiments, not only in terms of governing blockchain-based networks and protocols (which can be thought of as digital institutions), but also in terms of using these networks and protocols as tools of governance in other contexts (i.e. as contributing to the digital transformation of traditional institutions). [31]
  • Crypto enables new forms of online coordination and community-building, including decentralized autonomous organizations (DAOs), that were not possible prior to the invention of public blockchain networks. These communities and organizations are unique to the economic system that is forming around assets, contracts, and relationships tracked via blockchains. [32] Over time, this emerging crypto-economy may increasingly challenge — or become integrated with — more traditionally organized parts of the digital economy.

Crypto as automation

Technological progress tends towards increasingly higher degrees of automation. This tendency has been particularly evident since the Industrial Revolution and has been amplified by the ICT Revolution. The combination of computers, sensors, network communications, and advanced robotics is enabling increasingly sophisticated cyber-physical systems in which a large number of concurrent procedures can be completed at scale with minimal need for human assistance or intervention. While this is most often highlighted in the context of agriculture, manufacturing, transport, and utilities (Industry 4.0), the impact of ICT on automation goes much further.


The description of crypto presented above, inspired by the neo-Schumpeterian theory of techno-economic paradigm shifts, can be summarized in the following five propositions:

  • Crypto is not a technological revolution. It is yet another cluster of innovative activity enabled by ICT (cryptography, computers, software, distributed networks, etc.) and, as such, can only be categorized as part of the ICT Revolution.
  • Crypto is partly a reactive, techno-populist reform movement. In terms of its critical stance towards incumbent institutions and the economic power relations inherited from the first half of the ICT Revolution, crypto is typical of the early deployment stage.
  • By enabling more ICT-native forms of finance (digital, global, programmable), crypto presents a competitive challenge to incumbent financial institutions, accelerates their digital transformation, and drives financial and regulatory reform tailored specifically for the Information Age.
  • Crypto is primarily a process and institutional innovation. By combining the existing capabilities of ICT with innovations in decentralized consensus and coordination mechanisms, crypto enables ICT-native forms of organization that extend beyond just money and finance.
  • Crypto represents the continuation of administrative digitization and automation triggered by the ICT Revolution. By enabling more decentralized and censorship-resistant forms of automation, crypto opens up new prospects for global governance and, as such, can be viewed as a central theme in the emerging (geo)political economy of automation.


[1] Perez, C. (2003). Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages. Edward Elgar Publishing. For a more recent discussion by Perez on the periodization of technological revolutions, see Perez, C. (2017–2018). ’Second Machine Age or Fifth Technological Revolution?’ Beyond the Technological Revolution (especially parts 1–3, available here, here, and here).



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