We are entering a Digital Renaissance and are immersing ourselves deeply into digital life. The internet, smartphones, and other technologies are converging to create new methods of self-expression and ways of interacting digitally. The Information Age has started to come alive, forming a robust and globalized digital economy.
This article covers some elements and emerging principles of the digital economy and how they will impact your life.
The Digital Renaissance is Built On a Foundation of Content & Influence
It’s rare to interact online these days without using a social media platform. These platforms provide a strong example of what’s to come.
They are elaborate systems that leverage network effects to connect large groups of people. They grow in value as more people join the network and add content to the ecosystem. Understanding the power of social network effects and their interplay with content creation is a foundational element of the global digital renaissance.
The Power of Content
Social network effects built from user content are moving the digital ecosystem towards a model of User-Generated Content(UGC). Users add content to the internet in hopes of attracting an audience, gaining influence, and monetizing the entire process. This content creation business provides lots of money to creators. As an example, a top TikTok influencer can earn as much as $20,000 per video.
The Power of Influence
But content creation doesn’t just provide substance to the internet, it also provides the creator with an ability to influence large groups of people.
Influence creates the foundation for the internet’s power structure. Influencers are now frequently associated with a changeover in power dynamics. From traditional elites to a new set of digital elites.
In the Information Age, influence becomes a new form of capital.
The Inflation of Information Assets & Importance of Cultivating Scarcity
Information Asset Inflation
The internet is limitless in it’s size and scope. What happens when content and influence become valuable? More people try to produce more content and become influencers. But all they really do is create more of the same “stuff”.
There are no bounds to what can be created. As more people create content to gain influence and cultivate digital value we can expect a form of inflation. The more informational and digital value created, the less valuable they will become.
It’s the opposite of scarcity.
To that end, on the internet, scarcity becomes an increasingly important attribute of high-value digital assets.
As society becomes more immersed in the digital economy, assets such as Bitcoin become essential. One of Bitcoin’s fundamental elements is that it was created with a maximum supply as a method for restricting inflation. It is built to be scarce.
We can expect the digital economy to evolve to incorporate inflation restrictive governance mechanisms.
Digital Assets Like NFTs Will Become Common
Money is used as a representation of value in order to exchange one asset for another. Shells, beads, coins, and paper currency, were created by humans to eliminate the need to barter their assets.
In the digital economy, cryptocurrencies like Bitcoin are becoming common units of exchange. Although Bitcoin may play an important role in the future of the digital economy, digital assets are capable of much more than functioning as money.
Like Non-Fungible Tokens (NFTs) which are digital representations of unique, rare, and indivisible assets. Examples of NFTs include things like unique digital art, contracts, web domains, avatars, intellectual property, code, data, email addresses, photos, videos, and other digitally native possessions that can have an assigned value.
The more assets that are created in the digital economy, the more people will seek to exchange these digital assets with one another. Thus creating a robust economy will form around digital assets.
Accumulated Advantage for Early Adopters
Human beings often operate according to the influence of Normalcy Bias. It causes us to ignore or explain away societal level changes that are taking place. This is an important psychological phenomenon to be aware of as we enter the Digital Renaissance.
The individuals that recognize the changes taking place and react first will gain an advantage over their peers. By building digital-first businesses now and accumulating digital assets, individuals can capture a cumulative advantage. ie: they will gain an early lead that will compound over time. Focusing on accumulated advantage is important for building generational wealth.
In the Digital Renaissance, we can expect first mover advantages to have significant impact on the future formation of the digital economy and the social class structure that forms around it. The people that create digital businesses and accumulate digital assets will become a location-independent social class. They will be able to move around the world in search of governments that cater to their specific needs.
Early influencers, digital advocates, and businesses will gain a runaway compounding advantage over location-dependent people.
The Digital Renaissance Class Structure is Created by Remote Work
What society has learned from COVID-19 is that companies are becoming more comfortable with their workers conducting business remotely. In normal times, remote work is conducted anywhere. Jobs that include programming, content creation, sales and many functions traditionally tethered to a specific location don’t require recurring onsite visits.
As remote work becomes a normalized option for location-independent workers, expect to see a significant reordering of location preferences. Relocating to lower tax jurisdictions, communities with better child education, better healthcare options, and places that adhere to their social appetites (city vs rural).
This will have lasting consequences to how local and national governments adjust their policies and how class structures organize.
The Digital Renaissance Promotes User Generated Content with No-Code Software
Society is shifting from a consumption-driven economy to a niche producer/consumer model fueled by software-driven growth.
My own theory is that we are in the middle of a dramatic and broad technological and economic shift in which software companies are poised to take over large swathes of the economy. — Marc Andreeson
Its easier than ever for individuals to produce their own unique digital content, products, and services. This User-Generated Content (UGC) is a primary driver of modern commerce in the digital renaissance.
Demand for SaaS products is growing faster than the supply of skilled programmers needed to design and build new software. To address the problem, software developers created tools called no-code & low-code that allow non-technical enterprise workers to create software of their own.
No-code is a prefabricated drag and drop set of features that users can select in order to customize their products. As more of the global population gain internet access and conducts business online, no-code solutions will provide a means for creative and productive expression.
No-code reinforces the growing remote working class and provides an opportunity for upward social mobility.
Online Gaming Economies are Models Showcasing What is to Come
Many recent virtual game economies act as guides for what to expect in the broader digital economy.
Online gaming communities like Roblox and Minecraft showcase the importance of platforms adapting to UGC developer communities. Games like Fortnite showcase the importance of rare and highly sought after accessories that perform various functions. Some of these digital accessories provide value to players and communities as status symbols. The more rare the items are, the more highly valued they become, providing important market-making forces. These represent prototypical NFT’s of the future.
Anything scarce will ultimately be tokenized because the benefits of digitization and increased liquidity are so great. -Balaji Srinivasan
In World of Warcraft, we see the consequences of runaway inflation of digital assets like in-game currency and basic utility items. Inflation alters the competitive dynamic of these markets. This aids a minority group of elite and entrenched individuals at the cost of the majority. Ultimately showcasing the power of the first mover and accumulated advantages that are present in digital environments.
The Bottom Line
Technological progress is taking society into a digital renaissance. The individuals and businesses that adapt to this change quickly will dominate the coming decades. By building platforms of user generated content, acquiring digital assets, and establishing influence over early platform communities, early adopters will emerge as the upper class in a new social order.