Doc's Daily Commentary
Mind Of Mav
The Digital Renaissance
The world is entering a digital renaissance.
This new age is characterized by new technologies that empower us to immerse ourselves deeply into digital life. The internet, smartphones, and other technologies are converging to create new methods of self-expression and ways of interacting digitally.
As a result, the Information Age has started to come alive, forming a robust and globalized digital economy.
Here are some important and emerging principles of the digital economy and how they will impact your life.
- Content Is King
It’s rare to interact online these days without interacting with a social media platform. These platforms are elaborate systems that leverage network effects to connect large groups of people, i.e., they grow in value as more people join the network. Understanding the power of network effects is an essential part of the global digital renaissance.
Social platforms and their network effects are moving the digital universe towards a model of User-Generated Content(UGC). Users add content to the internet in hopes of attracting an audience, gaining influence, and monetizing the entire process. There is a lot of money and influence to be gained from content creation.
A recent study indicated that top TikTok influencers make as much as $20,000 per video. In addition to money, content creation gives a person an ability to influence large groups of people. This can be used for many different things but in general, it’s associated with a changeover in power dynamics from traditional elites to a new set of digital elites.
But creating content isn’t restricted to social media on the modern internet. As users cultivate content on the internet, they begin to create a reputation and generate influence.
In the Information Age, influence becomes the new form of capital.
- The Importance Of Digital Assets
Money such as shells, beads, coins, and paper currency, were created by humans to eliminate the need to barter their assets. In short, money was used as a representation of value in order to exchange one asset for another.
In the digital economy, money is becoming synonymous with cryptocurrencies such as Bitcoin. Although Bitcoin may play an important role in the future of the digital economy, digital assets are much more than cryptocurrencies designed as money.
Digital Assets include things like unique digital content, smart contracts, web domains, avatars, intellectual property, code, data, email addresses, photos, videos, art, and other digitally native possessions that can have an assigned value.
As more economic activity takes place online, we can expect digital assets to take on increasing value and importance within the digital economy.
The more assets created in the digital economy, the more people will seek to exchange these digital assets with one another. Secondary markets will be established to evaluate dissimilar assets and digital money will be adopted as units of exchange.
Soon, a robust economy will form around digital assets that won’t see the same drastic ebb and flow we’ve seen in the crypto space over the years.
- First Mover Advantage
As a result of Normalcy Bias, most people will ignore the societal level changes that are already underway until they can’t avoid them anymore. The individuals that react first and build themselves digital-first businesses and accumulate digital assets will stand to capture a cumulative advantage.
What we know about cumulative advantage, sometimes referred to as the Matthew Effect (or Bitcoin effect), is that the rich get richer and the poor get poorer, i.e., gaining an early advantage or disadvantage matters a lot in the long run. Early wins compound over time creating a massive advantage for the early adopters.
We can expect this to be true of the digital economy as well.
If you assume that life is becoming more digital (not less) and that a disproportionate amount of our time and wealth will be spent “online”, then fortune favors the digital-first movers.
Early influencers, digital advocates, and businesses that are positioning themselves for the future stand to gain a runaway compound advantage over everyone else.
- Scarcity Exists — Even In The Digital
The internet and the forthcoming Metaverse are characterized by limitless size and scope. There are no bounds to what can be created. Within this limitless environment, scarcity will become an increasingly important attribute for high-value digital assets and skills.
Many recent virtual game economies act as guides for what to expect in the broader digital economy. In online gaming communities such as Fortnite, there are rare and highly sought-after accessories that perform various functions. In addition to their utility, some provide value to players and communities as status symbols. The more rare the items are, the more highly valued they become, providing important market-making forces. These factors are true for all digital assets.
Individuals and organizations that are capable of creating or acquiring scarce digital assets stand to benefit greatly from this market dynamic.
Anything scarce will ultimately be tokenized because the benefits of digitization and increased liquidity are so great. -Balaji Srinivasan
- Inflation Devalues Information Assets
As more people create content to gain influence and cultivate digital assets we can expect inflation. In short, the more information and digital assets created, the less valuable they will become. It’s the opposite of scarcity.
As society becomes more immersed in the digital economy, self-governed, and restrictive assets such as Bitcoin become essential. One of Bitcoin’s fundamental elements is that it was created with a maximum supply as a method for restricting inflation.
We can expect the digital economy to evolve to incorporate inflation restrictive governance mechanisms.
- Live Anywhere, Work Everywhere
What society has learned from COVID-19 is that companies are becoming more comfortable with their workers conducting business remotely. With most modern work, you can travel the world and conduct business from anywhere there is an internet connection.
As a short-term consequence, workers may find they are able to collect a salary in dollars while residing in a country where the dollar is highly valued.
Profiting from the reduced costs of living. Because companies are allowing more remote work and it represents a new value proposition to workers, we can expect a significant worker migration.
- Labor Redefined
The internet is also creating a great equalization of access to opportunities that improve quality of life.
As of 2020, nearly half the world still does not have stable internet access. But as less developed areas of the world gain access, developing world citizens will enter the digital economy job market.
We can expect these new workers to charge wages that undercut developed world laborers because of their reduced cost of living in their developing world jurisdictions.
Consequently, a great labor arbitrage will take place throughout the world.
Companies will become more globalized as they seek out information age labor at more affordable rates around the world. Developed world job markets will suffer as job salaries are reduced to the global market rates. At a high level, it creates a great equalization of labor throughout the world which is a boon to business.
- Citizen Developers
A digital transformation is underway as more initiatives such as Starlink bring internet to the entire world. One major change is that we have shifted from a consumption-driven economy to a niche producer model with a new hunger for software-driven growth.
Through these digital developments, it is now increasingly common for individuals to produce unique digital content, products, and services for sale to a global and connected digital economy.
Not only are individuals now creating content, but non-technical enterprise workers are also empowered to create software to solve problems that scale globally. These enterprise-level content creators are referred to as Citizen Developers.
- A New Software Renaissance
The demand for SaaS products is growing larger than the supply of skilled programmers to design and build new software. As a result, there is a growing desire for software that is highly customizable known as No-code — software that lets users with little to no coding expertise to customize their own digital products (similar to WYSIWYG editors).
Think of it as highly customizable boilerplate software for non-technical people. No-code platforms create flexible and easy to understand design spaces for different purposes.
At the core of the no-code movement is User-Generated Content (UGC) we covered in point one. If we give people the tools to build what they want, then we can expect unprecedented growth in software serving the needs of the Information Age.
- The Concept Of Privacy Is Radically Shifting
People can create and extract value in an exclusively digital world. As such, there will be a growing resistance to paying tax on income generated within digital settings.
This paradigm shift will give rise to Digital Citizenship. Self-sufficient individuals that are capable of building a life for themselves anywhere on the planet who seek to freely express themselves in any way they desire. These individuals will increase in number as more opportunities to immerse in digital life become available.
We can expect this separation of digital identity from the physical self to also create an increase in preference falsification.
- Those That Empower Digital Will Inherit It
As the value of the internet grows, some forward-thinking Nations will redesign their laws to attract Digital Citizens.
Tax and citizenship laws will be structured to attract digital-oriented professionals looking to capitalize on the early cost of living arbitrage opportunities. As a consequence, slower-moving and less forward-thinking nations will start to see a migration of their populations.
Restrictive policies such as border controls, taxation, and educational visa freezes will lead to digital workers seeking new nations to reside in and add value to.
The future will be a more immersive digital experience. Some people will benefit greatly while some feel disenfranchised by these changes.
The principles we covered some of the fundamental attributes shaping a bright and interesting digital economy. Regardless of where you may fall, the world is transitioning to an immersive digital renaissance.
Sure, in this age of continuous updates and always-on technologies, hitting refresh may sound quaint, but still when it’s done right, when people and cultures re-create and refresh, a renaissance can be the result ― Satya Nadella
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