We often talk about the “new economy” but it is a bit of a misnomer as it can be argued that the economy is always new. It is dynamic and always changing. In spite of that, the name has become a buzzword describing new, high-growth industries that are on the cutting edge of technology and are the driving force of economic growth.
One of the main features of the new economy is the extraordinary rate of productivity improvement. It is not just that computers and software are getting better or that communications are becoming more rapid. They are improving at sustained rates that have never been seen in the recorded economic statistics.
A large part of the new economy – particularly software – is characterized by a cost structure that is peculiar to information: it is expensive to produce but inexpensive to reproduce. Combined with the communications power of the Internet, this means that any digitized information can be reproduced and transmitted around to world in virtually limitless numbers at virtually the speed of light. These are the most powerful economies of scale known to date.
Another aspect identified with the new economy is its strong network characteristics. Networks can have powerful economic impacts in several dimensions. They have strong rates of adoption and a strong tendency toward market dominance or even monopoly.
In order to survive in the new economy it is necessary to understand the changes that are happening and embrace them. Those that resist will be left behind. We have seen it before. When the personal computer was first introduced on the market there were many that refused to adopt it. Their resistance quickly found them segregated from the rest of the market in terms of opportunities and skills. Now we find ourselves in a world where not a day goes by where we have some kind of interaction with a computer. In fact you can’t avoid it.
To help understand some of the changes and disruptions that are happening in this new economy we look at a few below that are making the biggest impact.
The Sharing Economy
The sharing economy is thought of as an umbrella term which encapsulates a wide variety of ideas. However, there has been a lot of criticism around the idea. Critics have said that it’s not really “sharing” if people have to pay for a service. It might seem like semantics, but the implication is more communal than corporate, and in that sense, misleading. It is also known as the On-Demand Economy, or the Gig Economy. Gig Economy is a fitting term for people interested in supplementing their income by taking small, temporary side jobs. But for workers that do this full-time or even beyond, their work should certainly be considered more than a gig. Especially when companies like Lyft offer incentives to work 50 hours a week, this service has become their livelihood. Calling their work a “gig” is almost reductive.
For argument sake we define the sharing economy as a socio-economic ecosystem built around the sharing of human, physical and intellectual resources. It includes the shared creation, production, distribution, trade and consumption of goods and services by different people and organisations.
To include this in the new economy seems slightly banal considering the fact that sharing is nothing new. Giving someone a ride, having a guest in your spare room, running errands for someone, participating in a supper club—these are not revolutionary concepts. The revolutionary part is the fact that it has become part of the economic structure and for that to happen money has to change hands.
The best current examples of the “sharing economy” include the following:
Airbnb is an online marketplace and hospitality service, enabling people to lease or rent short-term lodging including vacation rentals, apartment rentals, homestays, hostel beds, or hotel rooms. The company does not own any lodging; it is merely a broker and receives percentage service fees (commissions) from both guests and hosts in conjunction with every booking. It has over 3,000,000 lodging listings in 65,000 cities and 191 countries, and the cost of lodging is set by the host. In short, anyone can rent a room out in their house or apartment for a fee. The impact it has had on the hotel/hospitality industry is not to be trivialised in the New economy.
These companies all do essentially the same thing. For consumers looking for a ride somewhere, they are a convenient, inexpensive taxi service. You can hire a private driver to pick you up and take you to your destination by means of an application installed on your smart phone. The nearest driver is often at your pickup location within minutes. Not only is this an on-demand car service, but you can even watch as your driver is en-route to come pick you up. For drivers, these companies provide allow you to be your own boss/set your own hours. Take on fares whenever you wish (work as much or as little as you desire).
Etsy is an online buyer and seller community similar to eBay, except it focuses on hand-crafted or vintage goods. Most products sold fall into the category of arts, crafts, jewelry, paper-goods, housewares, and artisan candies or baked goods. Vintage items must be at least 20-years old to qualify and can range from costumes, clothing, jewelry, photos and housewares. In the past, most crafters and artisans sold their goods at fairs, open markets, and on consignment. While the Internet opened doors to reaching consumers beyond their local area, many craftsman didn’t want the hassle of setting up their own website, credit card processor or ecommerce platform in order to sell their goods online. While eBay and other e-commerce DIY sites helped, Etsy provided a marketplace specifically for crafters. Etsy currently has well over 54 million users registered as members.
TaskRabbit is a marketplace that connects people who need help with something, with a network of pre-approved and background checked individuals, who have the time and skills needed to complete the listed task. The company allows people to outsource small jobs and tasks to others in their neighbourhood. Since the inception of TaskRabbit there have been numerous startups following the same model.
Where the Sharing Economy leads only time will tell. Will we live in a world of empowered entrepreneurs who enjoy professional flexibility and independence? Or will we become disenfranchised digital labourers jumping between platforms in search of the next short term gig?
What is cryptocurrency? A Cryptocurrency is simply an online version of money, a digital asset to be precise. The name is derived from the Cryptography, which is used to encrypt transactions and control the production of the currency. It is a strictly monitored process, as it uses the Blockchain Technology.
Blockchain technology is a distributed database that is used to used to manage & maintain a growing list of data blocks, using a peer to peer network collectively. These data blocks may be situated in different locations and not connected to the same Processor. A database is a collection of records. A distributed database is one which may be located in different locations and not be attached to a common Processor – but it may be located in the same or different physical locations and dispersed over a computer network. In a Blockchain, once a piece of data is recorded, it cannot be edited or changed.
There are predictions that the underlying technology of the blockchain is going to impact our world more than the internet has. This is seen as the technology that could democratize the global financial system so everybody has equal access. The peer to peer concept allows online payments to be sent directly from one party to another without going through a financial institution, and cryptocurrencies are considered by their supporters to be a faster, cheaper and a more convenient alternative to other payment mechanisms such as sending payments via banks, transferring money via money transfer operators or buying goods and services over the internet, using a credit card. For this reason, the payments industry players are closely watching these developments, because of the ability that cryptocurrencies have to potentially disrupt and transform the existing global financial infrastructure.
As of June 25, 2017 there were approximately 900 currencies currently available with the most popular being Bitcoin and Ethereum. Yet while world economies, business and consumers have been caught up in the whirlwind of activity surrounding cryptocurrencies, the benefits and risks are still unclear and the future of any one particular cryptocurrency is not yet secured. In addition, there are a number of legal and political interpretations still developing.
Virtual Reality / Augmented Reality
This is by no means the first appearance of virtual reality. It has actually been around since the 1950’s. As technology has become more sophisticated over the years, every so often the dream of experiencing a virtual world is revisited. We are now back here again.
Virtual reality immerses a user in an imagined or replicated world (such as video games, movies, or flight simulators) or simulates presence in the real world. Examples of hardware players in virtual reality include the highly mediatised Oculus, now owned by Facebook, Sony PlayStation VR, HTC Vive, and Samsung Gear VR.
Augmented reality overlays digital imagery onto the real world. Examples of hardware players in augmented reality include Microsoft HoloLens and Google Glass.
The difference between the two is where VR uses an opaque headset (which you cannot see through) to completely immerse the user in a virutal world as opposed to AR which uses a clear headset so the users can see the real world and overlay information and imagery on to it. We recently saw an excellent example of AR with the success of the game Pokeman Go, although for various reasons its user base is in decline.
The promises of Virtual Reality to revolutionize the fields of medicine, marketing or entertainment are many yet there are also a long list of challenges before we see significant adoption. We already know that spending too much time staring at a screen can harm our vision over the long term. VR headsets are essentially a digital display mounted directly in a user’s face, raising real questions about the effects over time. Some people are also prone to nausea, dizziness and vertigo after just a little time spent in VR. For the industry, that motion sickness issue remains a largely unsolved problem.
Virtual Reality has come and gone a few times over the years and has yet to really solidify its mark on society.
A large part of the new economy is about information. This is not only about information that we have access to but also our means of acquiring information. Organizations collect data from a variety of sources, including business transactions, social media and information from sensor or machine-to-machine data. These multiple sources makes it difficult to link, match, cleanse and transform data across systems. Data also comes in all types of formats – from structured, numeric data in traditional databases to unstructured text documents, email, video, audio, stock ticker data and financial transactions.
Big data is a term we use in the New economy that describes the large volume of data – both structured and unstructured – that inundates a business on a day-to-day basis. While the term “big data” is relatively new, the act of gathering and storing large amounts of information for eventual analysis is ages old.
The amount of data that is now being created and stored on a global level is almost inconceivable, and it just keeps growing. However, it’s not the amount of data that’s important. It’s what organizations do with the data that matters. At the moment only a small percentage of data is actually analyzed. The promise of big data in the New economy is precisely that, to gain key insights from all kinds of information in the hopes of making key discoveries.
Existing conventional modes of transportation of people consists of four unique types: rail, road, water, and air. These modes of transport tend to be either relatively slow (i.e., road and water), expensive (i.e., air), or a combination of relatively slow and expensive (i.e., rail).
Enter the Hyperloop. Hyperloop is a new mode of transport that seeks to change this situation by being both fast and inexpensive for people and goods. It is unique in that it is considered an open source transportation concept. The authors encourage all members of the community to contribute to the Hyperloop design process. Iteration of the design by various individuals and groups can help bring Hyperloop from an idea to a reality.
Hyperloop consists of a low pressure tube with capsules that are transported at both low and high speeds throughout the length of the tube. The capsules are supported on a cushion of air, featuring pressurized air and aerodynamic lift. The capsules are accelerated via a magnetic linear accelerator affixed at various stations on the low pressure tube with rotors contained in each capsule. Passengers may enter and exit Hyperloop at stations located either at the ends of the tube, or branches along the tube length.
The goal is to get people from LA to SF (for example) in just about 30 minutes, which is almost three times faster than flying, while producing its own electricity from solar power, with round-trip tickets projected to cost between $40-$60.
Hyperloop One on July 12, announced that it had conducted a successful first test of a specially designed vehicle to travel in a vacuum environment. In the test, which took place earlier this year, the company achieved controlled propulsion and levitation of a Hyperloop One vehicle at 70 mph on a 315-foot test track in the Nevada desert. The test vehicle reached nearly 2Gs of acceleration during its brief 5.3 second test run on the specially built track.
There are still a number of technical challenges to address with the Hyperloop but it is advancing. Should this project be fully realised it would revolutionise transportation in the new economy.
Of all the areas of the new economy artificial intelligence (AI) is, without a doubt, the most hyped and the least understood. According to technopedia the definition of AI is “a branch of computer science that aims to create intelligent machines.” More precisely, the term “artificial intelligence” is applied when a machine mimics “cognitive” functions that humans associate with other human minds, such as “learning” and “problem solving.” Otherwise said, machines that can think for themselves and make autonomous decisions and in turn learn from their decisions. All this leads to questioning to what point will machines control humans?
The machines haven’t taken over yet, however, they are seeping their way into our lives, affecting how we live, work and entertain ourselves. From voice-powered personal assistants like Siri and Alexa, to more underlying and fundamental technologies such as behavioural algorithms, suggestive searches and autonomously-powered self-driving vehicles boasting powerful predictive capabilities, there are several examples and applications of artificial intelligence in use today.
What many companies are calling AI are not truely AI. Software outputs due to an algorithm that responds based on pre-defined multi-faceted input or user behaviour can’t be considered AI.
A true artificially-intelligent system is one that can learn on its own, such as neural networks from the likes of Google’s DeepMind, which can make connections and reach meanings without relying on pre-defined behavioral algorithms. True AI can improve on past iterations, getting smarter and more aware, allowing it to enhance its capabilities and its knowledge. That will lead us to give them more responsibility, even as the risk of unintended consequences rises. We know that “to err is human,” so it is likely impossible for us to create a truly safe system.