"The robots are coming."

This is a phrase that many are uttering. With the advancements in robotics, especially humanoid, it is easy to see how this could be a reality by the end of the decade. By that time, it is possible that we see tens of millions of humanoid robots built globally each year. This will feed into the labor pool, helping to bring about a new economic era.

What this will look like, exactly, is hard to guess. Things get more convoluted when we add in the fact that "digital robots", i.e. AI agents, will be plentiful.

One of the fundamental premises of this is the fact that automation is increasing. These will operate without direct human interaction. Obviously, there will be programing and updates. The basic functionality, will be unsupervised.

If the machines are part of the economy, they will require the ability to conduct financial transactions. Here is where the innovation over the last 15 years comes in.

Image generated by Grok

Crypto Is Built For Machines

Can you see a humanoid robot walking into a bank and opening up an account? Along the same lines, imagine it trying to do that online.

If we think about the questions asked, they are impossible for a robot to answer. Naturally, we could see things altered to accommodate this but it would be a monumental task. We are dealing with a world that is becoming less dependent upon physical location. How are government regulations going to be drawn up?

This is the major task confronting governments all over the world. To me, this is a fool's errand, one they will pursue until it is time to give up. Think back to the early days of file sharing and how they tried to combat the distribution of music files.

A lot of what governments are grappling with will likely fall into the same category.

Getting back to the robots, AI, and finance, this is where blockchain is valuable. We already see the basic components for automated entities to operate.

Autonomous Transactions

Cryptocurrency is ideally suited to handle autonomous transactions. In fact, we see this happening all over the world. The basic infrastructure of blockchain networks already has this at its core.

Let us look at the structure.

A node is set up and validates blocks. This is done based upon the requirements of the network. For Bitcoin, a node much solve a complex mathematical problem, thus earning the block reward. Other systems may utilize a rotating schedule based upon staking.

Whatever the format, nodes produce blocks, adding to the chain. This is done on consistent time intervals, again dictated by the network coding. Once a block is added, that node receives the payout.

The reason this happens is each node is tied to a wallet on that network. When a payout is due, the system knows exactly where to send it.

No human interaction is required. The entire process is autonomous.

This is the future in action. At this moment, there are probably hundreds of thousands of nodes globally tied to different blockchain networks that run in this manner. Here we see a prime example of how machines are running things. No humans run the networks. Code changes and updates are generated by human developers but, once sent out, the machines keep things running.

The other point is the totality of the network. Even if one takes the node down, the system keeps churning out blocks as the other nodes step in. Nodes can enter or exit the system without issue as the coding allows for the addition and removal to the process.

Friction Removal

Again, consider what happens if a bank is involved.

Under the present system, an individual (or group) can set up a node. This is done by getting access to the proper hardware, loading the software, and setting up an account. The last part is really nothing more than having a wallet.

Once the node is activated and the wallet connected, operation can commence.

Now imagine if this occurred 10 times per day.

Contrast this with a bank. Each node operator would have to set up a bank account, providing documentation. Since a computer (or robot) cannot have an account, this would be in the name of a company or individual. That information would have to be tied to the node, with a path for conversion from the base layer coin to the bank's currency.

Rinse and repeat this 10x per day.

The friction is evident. With a crypto network, the garnering of a wallet could take a few second (to minutes). Once issued, it is ready for action.

In addition to removal of intermediaries, this can be tied to smart contracts that can dictate the authority the machine has. For example, there might be a limit to what can be sent from the wallet. This could be spelled out in a contract. We also could see other wallets requiring whitelisting to receive funding, something that might (or might not) have human oversight.

Automation is going to be the norm. Because of this, a monetary system to facilitate the economic activity is required. This is not going to be the traditional financial system.

The answer is crypto. After all, this was built for machines, being developed in the digital world.

Posted Using INLEO