New business models around Digital Currency will change the pace of innovation. It will bring success in areas that we haven’t seen big impact changes before; from green tech to nano tech, from space exploration to genetics and biology and many other disciplines and multi disciplinary areas.
Have you ever thought why we haven’t made any advancements for example in physics since 1940s? Have you ever thought of space exploration and the pace of innovation in Silicon Valley or around the world? Why are we exceeding in areas such as in media and media related industries but not in physics, other science areas or why we haven’t got the flying cars yet?
My answer to this question is the Business Models. Only media as an industry has an efficient “information-friendly” business model to create wealth and distribute it.
For media companies the business model is very clear. It is through advertisement. This results in winner takes all economy. We have Facebook, Twitter, Google which create wealth through advertisement as its business model. It is the winner takes all, whoever gets more clicks gets the advertisement money. The way that the information is collected can very well be distributed as in the case of Facebook— meaning everyone can be contributing to the information presented and productized — however how the money is made, how the wealth is created is very centralized. This results in only one giant winner company in certain fields where advertisement is the business model.
For other industries, how can we create an ecosystem where we create wealth and ignite innovation in those fields? Through making them advertisement sponsored businesses? Because advertisement works and the profit margins are quite nice, is that the direction we will go? As software is eating the world and all industries are becoming information businesses, will all the industries be advertisement based? For example, in the future, will we get our healthcare through ad sponsorships? Or our education? Or is there another way, another “business model” how wealth will be created?
I believe as every business is becoming an information business, we are pushing the boundaries for new innovation to come out in terms of business models too.
While the profit margings are getting thinner and thinner in every industry and the businesses are becoming software businesses, the advertisement business requires a huge audience and the only way to succeed becomes a winner takes all economy. While the profit margins get thinner and thinner in the currency that we use today — let’s say US dollars- which represent the currency in which material exchange used to happen, a currency for zero-sum exchange — we are ignoring another “asset” that we are exchanging/gaining, ie. Knowledge/Information. So let’s say that in every exchange in an information business, in addition to the US dollar value accounting, we are also keeping an account for the “Knowledge/information” value/asset. In that case we need a “Digital” currency representing the “information”, which will be piling up with each transaction. Then isn’t this a new wealth creation mechanism which will be bringing more wealth in a distributed manner to everyone involved in the creation and distribution of knowledge?
Years ago I have read the book “The Mystery of Capital: Why Capitalism Triumps in the West and Fails Everywhere Else”. In this book the author, Hernando de Soto is arguing that the “Assets” that are contributing to “Wealth” are accounted for and visible in the West while they are hidden everywhere else. The “assets” are either under the mattress or not even registered and accounted for therefore not used for financial credit, growth, further wealth creation and distribution. This book made me think about the emerging market problems and its society.
So now, my question is: “Aren’t we doing the same with “Knowledge/ Information”? In the Knowledge Economy we are in right now, we are not accounting for Knowledge as value at all, but only accounting in a unit which was designed as a social tool for another paradigm, a currency that is designed for material exchange. The “currency” as a social tool today needsto evolve and account for “Knowledge/Information” based economy. We need a “Digital Currency” to account for Knowledge/ Information exchange in transactions.
In an ecosystem where wealth is created through knowledge, many other industries will prosper. The implications of business model changes are tremendous in a society. Last time it has happened it was in the days of Queen Elizabeth I.
We will see innovation happening in a pace that we have never seen before. This change will not only happen in media industries but also in sciences and other industries. We can finally see new findings in physics which will hopefully take us to Mars and beyond, who knows? All I know is that we are ignoring a tremendous form of wealth creation which will fuel innovation and growth. We need to have our social tool, Digital Currency as part of the economy to fuel science and other fields and industries.