Key Takeaways:
Balaji Srinivasan says the legacy economy is being replaced by an “internet-first economy.”
Tech dominance led by the “Magnificent Seven” highlights the divergence from traditional industries.
Blockchain, AI, and crypto will underpin new digital-native economies and communities.
The traditional economy is being phased out in favor of internet-driven markets as blockchain, artificial intelligence (AI), and online platforms reshape global commerce, according to Balaji Srinivasan, former Coinbase CTO and author of The Network State.
“The legacy economy is being sunset in favor of the Internet economy,” Srinivasan wrote on X, pointing to the growing dominance of technology firms in U.S. markets.
He shared a chart comparing the “Magnificent Seven” tech stocks—Apple, Microsoft, Amazon, Alphabet, Meta, Nvidia, and Tesla—with the broader S&P 500. Since 2005, these seven companies have surged while most of the index has remained relatively flat, underscoring how digital platforms increasingly drive economic growth.
Internet-First Economies and Network States
Srinivasan argued that the world is still in the early stages of this transition. “Since the 2008 financial crisis, every transaction and every communication has moved online,” he wrote. “The next step is internet economies, communities, cities, and presidencies. The world is becoming Internet-First.”
He has long advocated for “Network States”—digital-first communities built around shared values and powered by cryptocurrencies. These, he argues, could one day replace nation-states much as industrial economies displaced agrarian societies during the Industrial Revolution.
Blockchain and AI Disrupting Legacy Systems
Regulators are slowly recognizing the need to modernize financial infrastructure. In September, the SEC and CFTC issued a joint statement suggesting U.S. capital markets could evolve into a 24/7 trading system, aligning more closely with crypto markets.
Meanwhile, blockchain is being integrated into public-sector transparency efforts. The U.S. government has tapped oracle providers Chainlink and Pyth Network to publish economic data onchain, marking an early step toward digitally native governance.
Srinivasan says such developments are part of an irreversible shift away from the legacy system: “Out with the old and in with the new,” as blockchain and AI accelerate the rise of an internet-first economy.
