Disruptive Technology and Digital Economy

Endless terror. Refugee waves. An unfixable global economy. Brexit. Surprising election results. New billion-dollar fortunes. Miracle medical advances. What if they were all connected? What if you could understand why?

We are surrounded perplexing events occurring all around us. But day after day, new figures and forces emerge that seem to have overpowered this turbulent times and disrupted established criteria.

Imagine a handheld super computer, or genome sequences, or artificial brains chatting amiably about weather while playing DJ on the kitchen counter. A simple question about a doctor’s bill will lead first to a touchscreen, then to a robot, then to a voice caroming off to a satellite from a call center in Mumbai or Manila.

American Historian Henry Adams noted in his autobiography (page 381; The Dynamo and the Virgin) “The new forces were anarchical”. With those five words he wrote an apt motto for the chaos and technological disruption to follow, all the way down to this moment.

Modern Capitalist regime stood upon the foundation laid by the Industrial Revolution. As the technological innovations dispersed to a larger areas of making money (business) this created need for paper currency and invention of banks to park the money and issue credit/give loans. Hence common paper became as precious as gold, and risky long-term loans being transformed into safe short-term bank deposits. At their core both ideas were revolutionary and almost magical but the new waves (and needs) is going to make them outdated.

E-commerce has been major disruptive factor. Online sales which began one and a half decade back, mainly with the sale of books and CD’s, rapidly expanded in the last decade to almost all retail sectors. With an online penetration of around 70 percent, the sale of music and books has become predominantly digital. Clothing and even daily groceries are also increasingly being purchased online. The total revenue of Amazon in 2015 was $107 Bn (source NASDAQ) and it operates only in a dozen of countries of the world including India (competing with local player Flipkart; est. $15.5Bn) and China (competing with Alibaba; Rev $156.38 Bn-NASDAQ).

While the potential and success of an online strategy depend to a large extent on the degree of complexity and commoditization of the product and on the efficiency of distribution, the double digit growth can largely be attributed to the penetration of mobile internet. Mobile internet represents around 20 percent of all online sales, but with growth percentages of between 20 and 30 percent, it is gaining market share by the day.

In total, it is projected there will be 34 billion devices connected to the internet by 2020, up from 10 billion in 2016. The network of physical devices, vehicles, buildings and other items—embedded with electronics, software, sensors, actuators, and network connectivity that enable these objects to collect and exchange data, such devices will account for $24 Bn, while traditional computing devices (e.g. smartphones, tablets, smart watches, etc.) will comprise $10 Bn. Nearly $6 trillion will be spent on Internet of things solutions over the next five years.

With more EFT or online money transfers as electronic alternatives to traditional paper methods like checks and money orders, are associated with security concerns at any of the levels from ODFI (Originating Depository Financial Institution), and forwarded on to the Automated Clearing House (ACH) for delivery to the payee’s financial institution, called RDFI (Receiving Depository Financial Institution).

So irrespective of diverse opinions of financial experts, the rise in popularity of cryptocurrencies cannot be ignored. Today, there are a number of billion dollar businesses that accept Bitcoin as a form of payment. These include Dell, Reddit, Expedia, PayPal, and most recently, Microsoft. So for the uninitiated who have not yet grasped what Bitcoin and other cryptocurrencies are, but this is not something that should be ignored. Block Chain Protocol and the emerging ecosystem that is growing on it is here to stay.

Businesses will be the top adopter of these solutions.

Three ways it can improve their bottom line by 1) lowering operating costs; 2) increasing productivity; and 3) expanding to new markets or developing new product offerings.

Governments which are focused on increasing productivity, decreasing costs, and improving their citizens’ quality of life will be the second-largest adopters of these new methods.

Much of what will happen in the next thirty years is inevitable, driven by technological trends that are already in motion. From virtual reality in the home to an on-demand economy to artificial intelligence embedded in everything we manufacture—can be understood as the result of a few long-term, accelerating forces. These larger forces will completely revolutionize the way we buy, work, learn, and communicate with each other. By understanding and embracing them, it will be easier for us to remain on top of the coming wave of changes and to arrange our day-to-day relationships with technology in ways that bring forth maximum benefits.


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