AI x Blockchain

Deep Dives with Real Vision’s Chief Crypto Analyst, Jamie Coutts

Report release date: November 29, 2024

To access Jamie’s full report, sign up for Real Vision Pro Crypto using code BTC15 for your exclusive BTC Markets discount.

AI x Blockchain: Catalysts for a new economic paradigm

This report represents the culmination of ideas shared during my presentations at the Australian Crypto Convention in November and private institutional events with industry leaders. lt encapsulates a thesis developed over the past year, now crystallized with mounting real-world evidence. The full slide deck from my presentation can be accessed by signing up for a Pro Crypto account.

Much of my thinking stems from the groundbreaking work of Raoul and Julian on the GDP equation and their transformative "Everything Code." This year, witnessing the rapid evolution of blockchain adoption and significant developments at the sovereign level has solidified my belief that the world can chart a bold new course-one rooted in optimism and tangible solutions.

Al, blockchain, and Bitcoin are no longer fringe technologies-they are proving their transformative potential in tackling economic stagnation and systemic inefficiencies. This report distils these developments into a framework for understanding and seizing the opportunities of this paradigm shift.

Summary

• The Problem: Spiraling debt, stagnating productivity, and declining population growth have pushed the global economy to a breaking point, exposing the failure of traditional solutions.
• The Solution: Al, blockchain, and Bitcoin offer a transformative framework to redefine productivity, drive sustainable growth, and restore stability.
• The Opportunity: Al agents and tokenisation of real-world assets will accelerate blockchain adoption, unlocking immense wealth creation.
• Shifting Value Dynamics: dApps are set to capture the more value as Layer 1 blockchains become commoditized, presenting significant opportunities for innovation and investment.
• The Role of Bitcoin: While central planners may still debase the population, as the cornerstone asset of the digital age, Bitcoin offers a path to monetary stability and a recalibration of the government debt levels, rewarding early adopters in the new financial order.
  

Navigating a broken system

The global economy is at a breaking point. Debt has ballooned to over $300 trillion - 350% of global GDP - outpacing growth at an alarming rate. Productivity gains, once the hallmark of innovation, have stagnated, and for the first time in history, the global population is poised to decline. Traditional economic models, built on the pillars of population growth and ever-expanding debt, are buckling under the weight of gravitational forces and their contradictions.

This isn't just a hypothetical scenario - it's the reality we're living. The foundations of the financial system are cracking, with no viable solutions in sight from those at the helm. While technological innovation has delivered incredible tools, the fundamentals of the economy continue to deteriorate.

But here's where the opportunity lies: Artificial Intelligence (AI) and blockchain
technology are converging to create exponential growth, redefine value creation, and unlock the solutions to these systemic challenges. These technologies hold the potential to address the root causes of economic stagnation, offering a blueprint for a new, resilient paradigm.

ln this report, we'll tackle three critical areas:

• The problem: What's broken and why.
• The solution: How Al, blockchain, and Bitcoin can rebuild the system.
• The opportunity: How these changes can empower investors to take control of their financial futures.
  

By the end, you'll have a clear understanding of how to navigate this economic transformation - and, more importantly, how to position yourself to thrive in a world on the cusp of reinvention.

Section 1: The problem with growth

Population will decline for the first time in a long time

We've reached an inflection point in human history. For the first time, global population growth isn't just slowing - it's set to decline. Population growth, historically, has been the engine of economic expansion, yet that engine is now stalling.

Think about this: even after catastrophic events like World War l, World War ll, the Spanish Flu, and the Black Plague - which wiped out nearly half of Europe - the global population recovered and continued to grow. But this time, it's different.

Fewer workers mean less economic output, plain and simple. And no amount of debt or policy can fix that basic equation. The consequences are unavoidable. Fewer workers mean reduced economic output. lt's a simple equation, and no amount of debt or policy intervention can rewrite it. This demographic shift signals the need for new approaches to sustain economic systems, as traditional models tied to population growth become obsolete.

What happened to productivity?

Over the past 30 years, we've seen transformative innovation - PCs, the internet, smartphones, cloud computing. But here's the paradox: global productivity has barely budged.

Why? Because instead of addressing structural inefficiencies, we've automated them. We've optimized for convenience, but we've failed to solve the deeper problem at the heart of the current economic system.

No matter where you look, the data is clear - productivity growth has flatlined across developed economies, even as technology advanced at an unprecedented pace.

The takeaway here is clear: despite all our progress, we've yet to ignite a new wave of productivity. And without productivity gains, economic growth remains stagnant.

Debt > Growth: It's a crisis

We've identified two major challenges: slowing population growth and stagnant productivity. Now let's layer in the third and final piece of the GDP puzzle - exploding debt.

This chart tells the story. Since the 1970s, global debt has soared, accelerating sharply after the 2008 financial crisis and again during the COVlD-19 pandemic. The numbers are staggering:

• ln the U.S., debt is growing at 6.6% annually, while GDP growth lags at 4.1%.
• ln China, it's even worse - 10% debt growth versus 4.5% GDP growth.
  

Here's why this matters: when government debt exceeds 120% of GDP - a threshold already crossed by the U.S. and China - it signals a tipping point. Debt servicing begins to consume national budgets, leaving little room for growth-focused investment. Economies lose flexibility, becoming increasingly vulnerable to shocks. Historically, this is where we see defaults, austerity measures, or currency devaluations.

The conclusion is undeniable: our current trajectory is unsustainable, and without a radical shift, the system will continue to spiral.

GDP Growth Formula

We've just examined the GDP growth formula - population, productivity, and debt - and it's clear: every lever is moving in the wrong direction.

When GDP stagnates, bad things happen. Debt piles up as governments, corporations, and households borrow to fill the gap. This fuels inequality, breeds social unrest, and increases the risk of conflict - both civil and global - as nations scramble for resources and power.

Don't worry, the arsonists have the solution

So how do central planners respond to this dangerously low growth paradigm? By doubling down on the very policies that caused it.

Central banks print more money to create new debt, explicitly to pay off the old debt. They suppress interest rates to prevent the debt complex from collapsing, which encourages reckless deficits and fuels bigger asset bubbles. This vicious cycle perpetuates a fundamentally broken system.

Let's be honest: expecting these same central planners to fix the problem is madness. lt's like putting the arsonist in charge of the fire department.

Real incomes show we are being debased

You might be wondering, 'How does this affect me'? lf they are printing the money, then who benefits?

Look at this chart: between 2009 and 2024, U.S. real wages grew by just 0.6% annually, while the money supply expanded over 6%, and the Fed's balance sheet ballooned nearly 9% per year.

The result? A massive disconnect between money creation and real wage growth. That 0.6% wage growth, l might add, is also a mirage. As the money supply expands, every dollar you earn buys less. Real wages reflect the gap between nominal wages and inflation - and we know the official inflation rate is a bad joke.

But hey, who are you going to believe, the government, your own lying eyes?!

Monetary inflation may paper over the debt problem temporarily, but it erodes purchasing power, deepens inequality, and stifles real productivity.

Assets barely keeping up with money supply

Think owning assets will protect you? Think again. Even in Australia, the prized asset - real estate - struggles to keep up with the monetary inflation fueled by deficit-driven government spending, commercial banks heavily leveraged into housing, and a central bank complicit in expanding the money supply by 43% since 2020.

This chart highlights a critical point: while nominal asset prices may rise, their real value often stagnates when adjusted for the growth in money supply.

Take a look at the table - it's a standard asset return chart, the kind you've likely seen before. But here's what's often overlooked: how those returns stack up against the increase in global money supply, measured by the M2 aggregate of base money from the 12 largest economies in USD. ln the table, returns that outpace money supply growth are highlighted in green.

The message is clear: bonds are a losing proposition. They're essentially "dead money." And yet, sovereign debt - bonds - remains the collateral underpinning the global financial system. This creates a dangerous dynamic where debt piles up without delivering real value.

Owning assets helps - growth assets, in particular, fare better - but let's face it: everyone is losing purchasing power. This hits low-income earners, young people, and those just starting out the hardest. lt's not just inflation; it's systemic inequality baked into the economic structure.

The system isn't broken - it's rigged. Governments rack up debt, central banks print money, and liquidity inflates asset prices - benefiting banks, corporations, and elites while everyone else struggles.

This is cronyism, not capitalism. lgnoring it only deepens inequality and makes fixing the system harder.

Section 2: A new growth paradigm

The current system can't fix itself. Central bankers and those entrenched in the status quo have no incentive to tackle the root problems - doing so would dismantle their power and unravel the framework that serves their interests. True solutions must come from outside the system.

This is where technology steps in. Bold, transformative innovations in Al, blockchain, and monetary systems offer a path to fundamentally redefine productivity, value creation, and economic stability.

Here's the formula for fixing a broken economic model:

GDP Growth = Population Growth (AI) + Productivity (Blockchain x AI) + Bitcoin Standard

AI as the new population: An infinite, scalable workforce and consumer base that fills the gap left by demographic decline.

Blockchain powered by AI: A productivity revolution, eliminating inefficiencies and creating frictionless systems.

Bitcoin standard: A foundation of monetary stability, easing the burden of unsustainable debt.

Together, these forces form a new engine of economic growth - one capable of addressing the systemic challenges traditional frameworks have failed to solve.

AI = Infinite demand and productivity miracle

For decades, the global economy has been searching for a growth miracle. AI is that miracLe.

Al redefines the concept of population. Think of Al agents as tireless workers, operating 24/7 without breaks, salaries, or limits. When scaled across industries like finance, healthcare, and logistics, this endless workforce can unlock exponential growth. Al doesn't just fill the gap left by a shrinking human population, it amplifies productivity to levels previously unimaginable while generating infinite demand in the process.

ln a world drowning in spiraling debt and stagnant growth, Al offers a lifeline. lt has the potential to rebalance debt-to-GDP ratios, replacing old growth engines with a sustainable, transformative model. This isn't just innovation - it's a complete reimagining of how economies grow and thrive.

Blockchain: The productivity substrate

While Al generates infinite demand, blockchain provides the infrastructure to empower it. Forget the hype around memecoins - the real story is blockchain's transformation of global finance. By eliminating intermediaries, automating trust, and drastically cutting costs, blockchain is laying the groundwork for an era of unparalleled economic efficiency.

Take stablecoins as an example. They've already outpaced PayPal and traditional remittance systems in transaction volume. New fintech platforms are being built entirely on blockchains with stablecoins for their speed and programmability, while legacy fintech firms are swapping out the Trad rails for blockchain to remain competitive.

Traditional finance, on the other hand, haemorrhages hundreds of billions annually due to inefficiencies - fees as high as 6% for cross-border payments, multi-day settlement delays, and locked liquidity. DeFi (Decentralized Finance) flips this system on its head. With near-zero operational and labour costs and automated transactions, DeFi is already 66% more cost-efficient than the most capitalised Western banks (up to 80% for EM banks).

To access Jamie’s full report, sign up for Real Vision Pro Crypto using code BTC15 for your exclusive BTC Markets discount.

Jamie Coutts, CMT

A pioneer in crypto financial analysis and a sought-after speaker, Jamie has transitioned from traditional markets to digital assets, creating research insights for institutions assessing blockchains and digital assets as part of their strategic investment allocations. Jamie’s multi-disciplinary approach blends traditional macro, technical, and quantitative techniques with the emerging field of crypto fundamentals.

Jamie’s career started as a stockbroker in Australia before roles as an equity trader at a global macro hedge fund and equity sales in Singapore and London. In 2014, Jamie joined Bloomberg Singapore as the senior Asia Buyside equity specialist, where he later led the regional crypto/digital assets sales and product strategy before launching Bloomberg Intelligence’s crypto asset research product.

Jamie holds a business degree and two technical analysis designations, previously serving on the global board of the Chartered Markets Technician (CMT) Association, where he was also head of APAC Development. Jamie has spoken at conferences across Asia and the U.S., and his research regularly features on crypto podcasts. His content is available via the Bloomberg terminal, as well as Twitter and LinkedIn.

A passionate advocate for personal health, wellness and liberty, Jamie is committed to amplifying solutions that promote greater personal autonomy, economic freedom and decentralization.

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