Information Capital Assets: How to Grow Digital Wealth

Photo by Nicolas Picard on Unsplash

In order to thrive in the digital age, Sovereign Individuals must accumulate information capital assets. These information assets are like a digital spider’s web, they capture an increasing amount of passive value when networked correctly. And these assets are a critical element of building digital age wealth, influence, and personal freedom. Here’s what they are and why they matter to wealth creation in the digital age.

Capital assets are types of property or rights to possessions that a person owns which produce a future value. Land, stocks, bonds, patents, art, businesses, commodities, or contracts are all expected to provide the bearer with future value and are considered capital assets. Both businesses and individuals can own capital assets, although there are some sometimes differences between the two.

When we think about an individual’s capital assets we typically think of stocks, bonds, art, some property, and jewelry. But as we move deeper into the digital age, a new form of asset is becoming common and accessible to individuals. The information capital asset. And the people that have accumulated these informational assets over the past decade have already shown they can be quite lucrative.

What is an Information Capital Asset?

Information capital assets are similar to physical assets but also represent digital property or resources that can produce future value. Examples include websites, content portfolios, social media accounts, digital storefronts (like Shopify), digital assets like bitcoin and non-fungible tokens, niche podcasts, video blogs, curated lists, avatars, and gaming items. Even digital newsletters are also considered information capital assets.

On their own, these assets may not hold much value. But society is becoming an immersive, interconnected global economy. And in an immersive, global, and digital world, the long term value of these assets becomes clear.

What makes Information Capital Assets Valuable?

The internet creates a network effect, providing market liquidity for information assets, and supports their compound growth. But how? And what does this really mean for value creation?

Think of the internet as a network of humanity’s globalized knowledge which gives us streamlined access to information. The potential audience size can grow significantly once connected and distributed on the internet. Informational capital assets gain value primarily by making them accessible to the global network.

As an example, a small town newsletter may not be valued greatly by a population of 30,000 people. But when connected to the internet, the size of potentially interested people can grow enormously when distributed beyond the town to the connected internet. When you create digital assets and connect them to the internet, they gain value by leveraging the network of 4 billion people. And by some measurements, this global network is growing in size by 10% a year.

By properly curating information according to the organizational standards of the global internet, informational assets can develop increasing value over time. The investment of time, energy, and acquired knowledge can be exchanged for a variety of valuable forms of digital capital.

For more on the Newsletter example, check out How Newsletters Make Money.

Understanding Global Network Access

Access to a global network of 4 billion people on its own isn’t enough to create valuable information capital assets. ie: if I write a newsletter but fail to distribute it to anyone, it won’t accumulate much value.

As a result, the ability to both attract attention and increase network value has become valuable. A direct consequence of the social media era. The mass adoption of social media platforms has provided powerful means for individuals to cultivate massive, global networks. Through these social platforms, users can take advantage of network effects to share informational value. As social platforms grow their total number of active users, they gain value as more people join the network. (See Metcalfe’s Law)

Understanding the power of network effects is an essential part of building digital wealth. Creating and acquiring valuable information capital assets relies on understanding the importance of both feedback loops in network growth and the principle of compound growth.

Compound Growth

Compound growth is a type of exponential growth that can be hard to intuitively understand. It’s not a concept that fits easily within the mind’s eye. While linear growth is easy to visualize, exponential growth is something that feels abstract. But understanding how compound growth works is essential to establishing a digital presence and cultivating valuable information capital assets.

The graph illustrates how exponential growth (green) surpasses both linear (red) and cubic (blue) growth.

Since becoming a globally networked society, information growth occurs at an exponential rate. And understanding this is essential to building a meaningful digital presence. In a world with so much information, it’s critical to understand how to cut through the noise.

Let’s return to my Newsletter as an example. I’m trying to build an audience online. By focusing on curating content around a niche topic, and acting as a signal filter that removes unnecessary informational noise, the newsletter becomes valuable to my audience.

Each additional subscriber I gain adds exponentially larger potential value to my personal network. And as my audience grows, it helps reinforce my value to my niche of operation and owning that space. Audience growth reinforces my newsletter’s authenticity as a high signal information asset to the global network. So, optimizing content and distribution to continuously grow subscribers is critical for creating a valuable information capital asset.

My goal is to build a narrow and unique asset, over time, with the expectation that as I add information value to this resource, its future value will compound. As I accumulate specific information on my topic and organize it for mass consumption, it can become a resource for the information network.

This has become especially prevalent as search engine tools have become efficient at categorizing information by user preferences on the internet.

The End Goal

In the digital age, the goal is to accumulate a diversity of assets. They should add network value to the integrated, digital, and global network. You want to acquire, rare, specific, and curated knowledge that filters out the growing noise of the information age. While simultaneously building a personalized network and means to distribute this value to the digital world.

As life becomes more digitally immersed, it will be important to understand where new information capital assets will appear. Arriving first to accumulating new information capital assets will have an outsized impact on wealth creation in the digital age.

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