Submitted by OKG Research
Author: Wang Lele, Bi Lianghuan, Jiang Zhaosheng
Over the past year, disputes over "deglobalization" have continued in the physical world. In the digital world, a new model of globalization is gradually emerging.
In 2024, countries and regions with more than half of the world's population held general elections. The Russian-Ukrainian war entered its third year, and the war between Kazakhstan and Israel continued to spread. In his new book Nexus, Israeli historian Yuval Noah Harari attributed the secret of human civilization to the ability to tell stories. Globalization, as the dominant narrative, experienced its peak from the late 20th century to the early 21st century. However, the narrative of promoting win-win globalization led by developed countries was first opposed by them: the dividends brought by globalization were not universal, and the widening income gap and asset price bubbles were highlighted in the context of slowing economic growth, further polarizing the rich and the poor.
At the same time, a quietly rising wave of digitization presents a completely different direction. According to statistics from OKLink Research Institute, crypto assets have been legalized in over half of the countries and regions (119 countries and 4 British territories) so far. Since El Salvador became the first country in the world to adopt Bitcoin as legal tender in 2021, several third-world countries, such as Cuba and the Central African Republic, have followed suit. At the beginning of 2024, the U.S. approved 11 Bitcoin spot ETFs, bringing Bitcoin into the mainstream financial market. Coupled with Trump’s ten commitments regarding crypto assets, including establishing a Bitcoin national strategic reserve during the election year, a new wave of sovereign countries adopting crypto assets is unfolding, further promoting the globalization of crypto assets.
The 'self-opposition' of developed countries
Globalization was once viewed by developed countries as a tool for shaping the global economic order; however, those who first advocated globalization are now among the first to question this system. The cross-border flow of capital and industry has promoted the improvement of global production efficiency and has helped developed countries complete their transformation from manufacturing to high-value-added technology and financial services, while promoting consumption upgrades with lower-cost goods.
However, this process has also embedded profound structural contradictions, prompting the original beneficiaries to reflect on the cost of globalization. The most significant issue is the unequal distribution of wealth. Taking the United States as an example, its Gini coefficient rose from 34.7% in 1980 to 41.3% in 2019, an increase of 19% in income inequality. Although there was a slight decline in 2020, it subsequently rose again to high levels, and the income distribution issue remains severe, sounding an alarm for the globalization model.
Figure U.S. Gini Coefficient (1980 to 2022)
Furthermore, the production dominance of developed countries is declining: the share of BRICS countries in global GDP jumped from 7.7% in 2000 to 37.4% in 2023, while the U.S. share fell from 30.5% in 2000 to 24.2% in 2023, and the EU's share dropped from 26.6% to 17.5%. In manufacturing alone, the share of developed countries in global manufacturing decreased from over 70% in 2000 to about 45% in 2023, while the manufacturing value added share of East Asia and the Pacific region rose from 31.9% in 2007 to 46.5% in 2021. This imbalance exacerbates global competition and unequal distribution, becoming a microcosm of the deep-seated contradictions in the globalization model.
At the same time, the public debt problem in developed countries is also intensifying, with high public debt further exacerbating concerns about globalization. The U.S. government's debt as a share of GDP rose from 58% in 2000 to 98% in 2023, Japan has long maintained above 200%, nearing 260% in 2023. With surging fiscal deficits and interest expenditures, the debt pressure has weakened policy flexibility. These structural economic issues highlight the imbalance in the distribution of benefits and risk transfer brought by globalization, forcing developed countries to reassess the sustainability of the globalization system they lead.
Figure 2024 Global Government Public Debt/GDP
Currently, as the deep-seated contradictions of globalization become increasingly apparent, the uneven flow of capital and distribution of wealth have deepened social rifts. Historically, wars have often been the extreme means of resolving economic contradictions and political disputes, especially when the international system is imbalanced or the economic structure faces major crises. The Marshall Plan after World War I promoted the reconstruction of Europe and became the starting point for post-war economic globalization; during the Cold War period after World War II, the arms race and technological innovation between the East and West accelerated the revolutionary transformation of technology and industry. Although wars bring tremendous destruction, they often give rise to new orders and the reconstruction of global systems.
Today, we stand at the wave of digital transformation, witnessing technological innovation gradually replacing the armed confrontations of the past, becoming one of the new driving forces for economic and social development. In this new context, the manner of globalization is also undergoing profound changes: it is no longer merely expansion but a process of continuous self-correction and evolution. Innovation is opening up an unprecedented 'New World' for the global economy.
The 'New World' of globalization
At the end of the 15th century, Columbus intended to find the Asian continent rich in gold and spices but unexpectedly discovered a new world in the Americas filled with opportunities.
16 years ago, Bitcoin was born, defined in the white paper as 'a peer-to-peer electronic cash system' to address the systemic issues arising from reliance on traditional financial credit intermediaries. However, this initially seemingly 'disruptive' concept has already undergone a transformation; Bitcoin is no longer just 'electronic cash,' but is viewed as 'digital gold,' and is even being discussed as a national strategic reserve. The crypto market, represented by Bitcoin, is gradually penetrating the global financial landscape: evolving from a niche experimental field for geek punks to the 'New World' of the financial world.
This 'New World' differs from traditional globalization, breaking not only through geographical boundaries but also through the inherent model dominated by a single power center. It does not rely on a single economy or political power, but instead establishes a brand-new trust system through global consensus mechanisms and technological means, which is the foundation of the new globalization.
Against the backdrop of increasing trends of 'de-globalization' in the real economy and escalating geopolitical tensions, the global economy is under pressure, and the crypto market is gradually becoming a new 'pressure relief valve.' Taking Bitcoin as an example, in the ranking of major assets' performance in 2024, Bitcoin topped the list with an annual return of 128%. From a market value perspective, as of November 12, 2024, Bitcoin's asset market value has surpassed that of silver, ranking as the eighth largest asset globally. This not only highlights the new status of crypto assets in the traditional financial system but also reflects their potential for risk aversion and value appreciation in complex economic environments.
Figure 2024 Asset Class Return Rankings
This is not only the result of capital pursuit but also a manifestation of the borderless characteristics of crypto assets driving the formation of new globalized markets. Against the backdrop of geopolitical conflicts and restricted capital flows, cryptocurrencies exhibit their unique economic function of 'depoliticization.' Traditional economic systems are often heavily influenced by geopolitical factors. For example, the SWIFT system (a global interbank communication protocol) is often used as a tool for inter-state games during sanctions. After Russia faced SWIFT sanctions, some economic activities shifted to crypto assets, demonstrating the flexibility and depoliticization characteristics of crypto assets in responding to international conflicts. Russian President Putin subsequently signed a law recognizing crypto assets as 'property' and established a tax framework for their trading and mining, thus granting them legal status. For instance, in 2022, the Ukrainian government raised over $150 million in donations through crypto assets, proving its rapid response capability and transnational capital flow ability during crises.
On a deeper level, crypto assets are driving a new economic model that does not rely on power centers. This system based on technological trust replaces traditional institutional trust. Unlike the vulnerabilities of the traditional financial system—where financial crises, bank failures, currency devaluation, and other issues often expose the shortcomings of power centers—crypto assets fundamentally reduce these risks through technological means. In this trust world dominated by algorithms, real power no longer comes from a single authority but from the collective participation and assurance of countless nodes globally. Just as the Bitcoin network has around 15,000 nodes that vary with network activity and user participation, this decentralization significantly reduces the risk of 'single points of failure.'
This trust mechanism also provides a new foundation for global collaboration. The 24-hour uninterrupted trading and borderless attributes of crypto assets break through the limitations of religion, holidays, and national borders. Crypto assets are providing possibilities for bridging divides and reconstructing order in a world fractured by de-globalization.
As the saying goes, those who seek to earn the last penny will never achieve their wish. The 'globalization' of the physical world is like yesterday's flowers; attempts to squeeze out the last profit often lead to the imbalance and rupture of the system. Today's crypto market seems to provide a brand-new answer.
