Digital Assets: The True Game Changer

Much of the world has not figured out what is going on. For most, what is being discussed each day about cryptocurrency makes no sense. Instead, there are a number of people who attack what is taking place, believing there is no value. This is not only a mistake but a complete misunderstanding of how the world is changing.

It is safe to say this is mired in a long time belief about what the world is and what is valuable. This makes sense yet it is also something that was not in place for hundreds of years. Yet somehow people hold onto it.

Let us delve into this.

The Physical World

There are many who still believe in the physical realm. That is where they put their trust and belief. Basically, value only comes from something people can touch. It applies to everything in their opinion. The only realm that matters is the physical.

Here is where the challenge comes in.

What do Apple, Microsoft, Facebook, Amazon, and Google has in common? Obviously, they are the most valuable companies in the world. They also have very little physical presence. For example, Amazon has almost no retail square footage compared to its competitors yet dominates the market.

Obviously its value is derived from another realm.

The Digital World

Most of us are well aware that Google.com and Facebook.com have enormous value. But what are they? Is it the exact location in the digital arena?

We know that a URL points to a location. However, if the Facebook software was moved, would that URL have the vale? Would it be as valued at another location?

None of this really matters since it is the total package that provides the value. Yet very little of it is in the physical world. We cannot reach out and touch it.

Perhaps one could make the case it is part of the "real" world. This is the layer that society created on top of the digital world, mostly with the formation of civilization. For example, think of a town or a corporation. We can point to the physical attributes but that only captures part of it. A town, for example, has its laws, customs, and communities. All of that is an invisible layer that few would say does not exist.

The digital world is similar except that it is not local and has no physical ties. We know the Internet exists everywhere yet nowhere.

Virtual World

We know cryptocurrency and blockchain are changing everything. The reason for this is both were designed in the digital realm. They also are going to become more important as we forge ahead into the virtual arena.

Many ask what is the difference? A lot of people use the terms interchangeably and, to a degree, they are. However, the biggest change will be the switch to something that is more experiential. Presently, the Internet is something separate from us. We look at a screen of some sort which means that we are divorced from the activity.

This will no longer be the case. In the virtual realm, immersion begins to take place. We are not apart from what is happening onscreen but, over time, we become a bigger part of it. Through the advancement of technology, we will see more sensory stimulation to the point where many different experiences might be cast to us simultaneously.

As the graphics improve, which they did over decades, we know the line will blur. Early on, for example, it was easy to tell the difference between a video game and film. The quality of the two was light years apart. Today, that separation is not as great. We are seeing some gaming graphics which rival their Hollywood counterparts.

Digital Assets

It quickly becomes evident that, as we move into this new arena, an alternative monetary and financial system is required. We also have to denote ownership in a much different way than before.

Here is where cryptocurrency and digital assets enter the picture. Through the use of NFTs, we can clearly assign ownership as well as following the transfer of such assets.

Not only do we see how ownership can be marked, but how these assets can have value. Many discuss the Network Effect which is applicable. It does, however, go beyond that. As applications gain in popularity, the value at every level is enhanced. This means that digital assets can hold enormous value, even greater than in the physical world.

For example, a piece of land in some town might have value. If it is a small town in a favorable location, it could be worth a bit of money yet nothing lifechanging.

Looking at a virtual plot of land in a game, that could be worth millions of dollars if the game is extremely popular. The Network Effect of that game could be orders of magnitude greater than what exists in the small town.

All of this takes on added meaning when we factor in Artificial Intelligence. Down the road, we are going to see the development of systems that are far superior than what we have now. This means that the entire nature of transactions can change.

Obviously, the volume will increase drastically. We already saw this with the Internet. The majority of the communication traffic online is computer-to-computer.

Exponential Economic Output

The Era of Automation is upon us. This means that, over the next few decades, more of our output will be done sans humans. Robotics and AI are advancing at such a pace that we will see a massive shift in economic productivity.

In the virtual realm, we are likely to see low-code development emerge as the popular model of creation. This will usher in a major advancement in content creation. Suddenly, anyone will be able to develop applications simply from their imagination. What they can visualize will ultimately be transformed into a working part of the virtual realm. Here is where many believe the concept of the Metaverse enters. It is a fully decentralized and distributed system since anyone can create without permission or even the skillset to do so.

Here we see both the physical and virtual worlds changing in terms of economic activity. The level of output will be exponentially higher than today. Some even theorize what the upper limit truly is. Obviously, in the virtual realm, the only consideration is bandwidth and computational power. Both of these appear to be increasing as the decades go by.

Digital assets are going to be at the core of both of these explosions. With physical items, it is going to be the representation of what is accepted in the "real" world. With the next generation Internet, it is going to be a completely new class, capturing near unlimited value.

This is a true game changer with where technology is leading us. To overlook the impact of digital assets misses most of what is taking place.

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