The world is on the cusp of a digital revolution, with innovation altering the way we do everything from using appliances and devices to conducting financial transactions.
New asset classes
The digital economy is growing at a rapid rate around the world. Today’s digital economy is characterized by the creation of new asset classes and the digitization of traditional assets. Emerging technologies, such as blockchain, artificial intelligence (AI), the Internet of Things (IoT), and 3D printing, are playing a fundamental rule to drive this growth.
New technologies have assets that have the potential to dominate the global economy in the future. For example, the blockchain has virtual coins and tokens whose popularity has grown exponentially in a short period of time.
Great players entering the game
The blockchain allows users to transact safely and much faster than traditional methods. The characteristics of the blockchain have attracted many prominent technology and financial companies, including IBM, Oracle, JP Morgan Chase, and Boeing. For example, IBM recently partnered with Stronghold, a fintech company, to launch a dollar-backed cryptocurrency called Stronghold USD. This virtual currency is an example of how consumer trust in a traditional asset (USD fiat currency in this case) is used to support a digital asset.
There are also examples where companies are combining two new technologies to offer solutions for the future. Aerospace giant Boeing recently announced a collaboration with artificial intelligence company SparkCognition to develop blockchain-powered traffic management solutions for UAVs.
The game changer
Asset tokenization is not limited to traditional assets like currencies. The new market can use the intrinsic value of a wide variety of assets to provide security tokens. The blockchain can be a differentiating factor between security tokens and traditional securities. Using smart contracts on the blockchain eliminates the need for a middle man, reducing transfer costs. This blockchain usability has the potential to significantly affect the traditional banking system. It can also eliminate the need for money as a medium of exchange, as all assets are liquid, instantly available, and divisible.
Automation and artificial intelligence have already made their mark in many markets. Trading algorithms have overtaken human traders. In the manufacturing sector, machines have taken on many of the jobs that humans once did.
Need for a new framework
In this rapidly changing economy, it is no longer feasible to rely on traditional decision-making models and methods. To keep up with new developments such as DAO, AI, VR, P2P, and M2M, it is imperative that we develop a new framework. In other words, we must go beyond Munger’s mental models and focus on digital models, such as network theories and exponential growth models.
The digitization of our economy is occurring at a dizzying rate. Over time, we will get a clearer picture of what developments will dominate this new web 3.0 economy, but it is clear that this economic revolution is happening on a global scale.
