Many people are concerned about the future as the physical realm is changing more in a year than it has changed in the past decade. People are working from home, commute times have dropped and commercial real estate prices are falling off a cliff. While this is causing a lot of short-term pain, we’d argue that the long-term is brighter than ever. Virtual reality, crypto currencies, and remote work allows for a new digital economy to be born (not limited to physical space).
A More Digital World: Right now, kids are spending more time on their computers than they spend outside. Back 40 years ago, kids would spend a lot of time in the sun playing sports. Instead, they now compete with digital products (video games) and interact on their smartphones/computers/tablets.
As Darwin coined… This is a game of “survival of the fittest”. In the future, the economy is going to be more digital in nature since virtual reality opens up for worlds that are even more complicated and interesting than the physical one we live in today. Therefore, new businesses that we cannot imagine today will be extremely profitable in the future.
Here are some simple hints based on what is already happening if we look at crypto currencies alone. While everyone is looking at the recent Square announcement (purchasing $50M in bitcoin) we feel that it’s right/justified to give everyone an update on the other changes.
Decentralized finance: We covered this part of the ecosystem in basic terms in a prior post. Essentially, everyone is able to loan money in a peer-to-peer fashion. The loans are currently collateralized which seems to be a stick point for many individuals. Collateralized loans are safer for the lender as they are able to pick up the collateral if the loan isn’t paid back or the price of the collateral drops below a certain level (too close for comfort). We strongly recommend people look into this space.
Non-fungible Tokens: While most are focused on a few select currencies, artists are creating digital products that are “one” in nature. Imagine a Mona Lisa type painting and having only one original copy of it. While you could make fakes (there are many fake paintings in the world), there is only one original. The use of non-fungible tokens allows a digital artist to create original pieces that cannot be replicated as they are protected by code. We’re keeping the technical jargon out of the equation in this post so it is easier to understand. Artists can now create digital images that are rare.
Digital Property Rights: Over the past 20-30 years, digital items were easily replicated and sent around for free. There was no way to claim a “right” to anything beyond a website. This is now changing. If we can protect photos/images it is only a matter of time before other items can become protected. Think of a digital pet, a digital night club and a digital trip to Europe. It feels like “science fiction” however the technology we have today is making this a more and more likely scenario on an annual basis. Once virtual reality/augmented reality becomes high quality, the difference in feel will become non-existent.
Zooming Out: Take a step back, if the above appears to be complicated… that is the opportunity! It means that there will be a large learning curve as we build out a new digital economy that is separate from the physical economy. We’ll need money to transact, individuals to explain how the digital economy operates and new structures/organizations to solve any disputes. If you are an artist/musician this is even better for you because it means you gain more control of your revenue streams/value capture.
What does this new reality look like? The real answer is no one knows for sure. Back in the late 90s, no one would have predicted the smartphone, uber and millions of software companies that exist today. What we do know is that the market opportunity is probably in the tens of trillions of dollars. Why? Simple. If virtual reality becomes equivalent to reality (feel and atmosphere), you’ve quite literally created a brand new world. This is extremely similar to finding a new planet where humans could live.
Some Predictions: This wouldn’t be a fun post if we didn’t attempt to visualize the virtual world. So please laugh, enjoy or think about the following potential consequences.
Streaming Money: In the virtual world, assuming digital currencies are the future, this means you would no longer be paid on an “hourly basis” you could be paid based on a running meter like filling a gas tank. If you’re helping company B do any task in the virtual world, it automatically fills your account balance as you’re working and shuts off when you take your breaks. This is great for transparency and reduces positions where money is being paid out for no apparent reason (there are millions of these types of jobs in major corporations).
Museums & Pets (yes pets!): One clear growing segment is non-fungible tokens, as mentioned above. Since we know that humans prefer scarcity (expensive art, rare sports cards, diamonds/gold etc.). it means that these rare digital items should have value. The big collectors could then create digital museums, digital collectables and rare digital pets.
While this also sound sci-fi, it did happen for a brief period of time in the mid-late 90s. We’re really dating ourselves here, but back in the mid-late 90s there was a popular digital pet named a “Tamagotchi”. While the fad did eventually die (for numerous reasons), this becomes a lot more realistic if everyone is interacting in a virtual world. Instead of having a virtual dog, you could have a virtual dragon/mystical creature that is rare/expensive. If this sounds unlikely, we’d recommend looking at the number of virtual items purchased for video games alone (it’s a billion dollar industry).
Concerts/Scarce Events: We had a small version of this occur due to the COVID-19 pandemic, but the future will be a million times more detailed/interesting. A popular rapper/artist would no longer need to travel across the globe for every performance. They could host a virtual conference and have people pay for entry into their virtual concert room. Sounds extreme? Well… Travis Scott held a virtual concert using Fortnite that had over 12 million attendees.
Transparent Predictions: On the internet you have millions of fake screen shots, fake stock price returns, fake “I called it” proclamations. In the virtual world you could create a transparent system so all predictions/failures can be verified and checked without any ability to alter the time/date. We already see a small portion of this on Twitter. Since you cannot alter it, people with good prediction skills end up getting some traction. We say some, as it’s difficult to go through hundreds of thousands of tweets to find out if the person is accurate or not. In the virtual world, this would be transparent and easy to check! So if you’re good at predicting the future/major events you can look forward to a much brighter future as you can charge for your skills later on. For those that are unable to produce consistent results, the “jig is up” and you’ll lose trust rapidly.
Increased Autonomy: This is another major benefit. In the past the game of “scale” was to add headcount. This made sense in the industrial era. Companies want to prove that they are growing. They want to prove that they are adding headcount. Unfortunately, the is a skill-set for the physical realm not the digital realm.
Back in the 90s, you had to have a large organization to generate large amounts of revenue. In the 2020s, it is clear that you can build $30-50M+ annual revenue businesses with a handful of people (or less!). This is an amazing opportunity for anyone with a high IQ and limited resources. The resource constraint goes away since digital transactions will have limited friction.
Since you can generate millions of dollars as a solo organization (or a small number of people), the amount of self-sufficiency you receive is also higher.
Lower Barriers: Are you of the belief that the protesters are right? Are you of the belief that they are wrong and a problem for society? Guess what? It doesn’t matter in the virtual world! If you make your product in the digital realm, no one even needs to know what you look like. This is extremely similar to the affiliate marketing industry where your ad/copy skills are the product. No one knows who made it behind the computer screen. So if you were worried about racism in any way shape or form, this becomes a non-issue as no one will know who you are anyway.
As a side note, to be entirely race and gender blind, everyone should simply be a string of numbers/letters on a screen “298ij77sd76isj767so”. This would make it impossible to discriminate based on any physical attributes. So? Both sides of the debate should be happier. If you believed that XYZ race had an edge or that XYZ race was being helped for no reason, both of these issues are solved instantly.
The Downside of Responsibility: If you are confident in your skills and abilities, the above should sound absolutely amazing. You’re paid based on what you are delivering. There is no middle man. There is no racism. There is no physical limitation (since no one can tell). And. You don’t even have to work for an organization.
This is also a huge hit to people who were rent-seekers (adding no real value and simply doing nothing at work). This is a big negative because they cannot fake value by knowing the “right” people anymore. You’re flattening the access to clients/customers/consumers. Therefore, be extremely wary of people who are negative on the future (and technology) as they are announcing *publicly* that they are rent seekers in their current positions.
Strange Post: We realize this is a strange post for this website given the prior content but we needed to put it out there. Most are worried about the current state of the “old economy” but a new one is going to come. It will not only show up, but it will show up extremely quickly. Instead of being afraid of new technology it is always best to embrace it and be “early”. If you’re early, the rest will take care of itself.
If you want to learn more about the future we strongly recommend reading up on the following topics: 1) smart contracts and decentralized finance, 2) non-fungible tokens and decentralized organizations, 3) Virtual reality and augmented reality, 4) electrification of cars and batteries in particular – your home will eventually become a self-sustaining entity with a large battery!, 5) self-driving vehicles and drone delivery systems and 6) 3D printing capabilities.
Now that we’ve gotten this out of the way we’d love to hear about any other new items that are likely going to be developed in the virtual world. We’ll delete all negative comments saying this “won’t work” as we prefer to block pessimists who refuse to read and self-educate. But. If you have an interesting idea for the virtual world or more digital future we’re interested in hearing about it.
