Digital Transformation: From Atoms To Bits

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3 years ago - 4 minutes read

The last few decades saw amazing transformations in the world. Fortunately, or unfortunately depending upon your view, things are just getting started. The technological leap forward is in its infancy. For all the advancements we made, as the old saying goes "you ain't seen nothing yet".

Our conversion from a physical to a digital world is remarkable. At the core of this is our advancements in computation and communications. Each decade, we see massive increases in speed as well as power. Essentially, both can handle more in a shorter period of time.

Most are familiar with Moore's Law. For all the discussion about it ending, we see to keep plugging along.


What most are not aware of is the speed with which people are connecting to the Internet.


This all feeds into the fact that we end up creating more data with each passing year.


Here we see how life is in the digital world. When we see the impact over the longer term, we see how industries are disrupted.

One that was completely transformed was music. This once was completely controlled by the record companies. Today, the platforms wield a great deal more power.

Just look at Spotify's growth.

Music was once a resource intensive business. Think of all the raw materials need to stamp out billions of CDs, casings, wrappings, labeling, and then, of course, shipping. Today, a song is nothing more than an upload to Spotify's servers and then it is streamed to the customers.

Instead of sending atoms from one place to another, bits are simply transferred. The later is much faster and less expensive than the former.

We see a similar transformation with money. What once was a physical realm is now rapidly becoming electronic. Of course, digital money is really nothing new as we saw the shift towards that over the last 30 years. First debit and credit cards and now payment applications have turned the world of cash into a distant memory for most.

Which brings us to the latest evolution: cryptocurrency. This is moving us into an entirely new realm since the application creators can supplement that with their own currency. Instantly, a game is transformed into an economy complete with the means to transfer value, without ever leaving the platform.

Just think of the process of mining. Many allude to the fact of how expensive Bitcoin mining is due to the energy consumption. However, did they people ever analyze the resources used to mine, say, gold? Obviously, the mining of a digital asset requires a great deal less energy, along with environmental impact, that physical mining.

Of course, for most, the mining of Bitcoin is a ship that already left. However, there are many other projects that allow people to "mine" for crytocurrency or NFTs using a small portion of the financial resources required for either Bitcoin or physical mining.

It is here where we see the potential for radical expansion in terms of the number of people involved. How many people partake in physical mining?

According the to the Bureau of Labor Statistics, in the U.S., that number was 654,000 in 2018. Obviously, these are the people who work for companies in this industry.

With cryptocurrency mining, there is the potential for tens of millions to partake. There are many PoW blockchains that allow people to mine off a smartphone or laptop. At the same time, many virtual miners are popping up allowing people to simply purchase "mining tokens" which end up generating the native token.

Notice the absence of land, permitting, employees, and mining/drilling equipment. Instead, one simply conducts a transactions, perhaps stakes the miner, and collects whatever comes in.

The transition from Atoms to Bits offers a number of benefits.

  • We see abundance in the lack of physical limitations. The only limits are computational power and speed of connection, both of which are increasing exponentially.

  • Costs drop rapidly, moving towards zero margin. The digital world is a minimum of 90% more cost efficient than the physical. This is why the mega technology companies have such high margins.

  • These two factors allow the number of people involved to grow significantly. Whereas there were hundreds of thousands involved in something, in the digital realm, there can be millions.

All of this will keep increasing, especially as we start to enter the world of edge computing. With increasing computational power and more data, AI is only going to expand in ability. Over time, we are going to see AI capability move closer to the end user. This is edge computing.

Thus, what is presently done on centralized servers will be handled, to a degree, on the end device.

The result will be another jump in the results we see on a daily basis.

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