When the world walks a tightrope đ«
Old financial systems are changing, institutional powers are in flux, and the very essence of capitalism could use a rethink. This is Issue #020 of Forward.
In 1975, when Kodak was at its prime and sold 85% of all cameras and 90% of all photographic film in the US, one of their engineers built a mechanism to store images digitally. The engineer, Steve Sasson, patented the tech, and estimated that such âdigital camerasâ could compete with film cameras in about two decades.
He was right⊠and Kodak did nothing about it.
We know how that played out.
As exponential leaps in progress become more frequent, companies that fail to plan accordingly often see seemingly unassailable competitive advantages wiped out. One big reason, which Sasson himself alludes to, is that corporate bigwigs driven only by skewed incentive structures and a short term understanding of capitalism canât always be relied on to take leaps of faith.
âWhen youâre talking to a bunch of corporate guys about 18 to 20 years in the future, when none of those guys will still be in the company, they donât get too excited about itâ, recalls Sasson.
The Exponential Age is upon us, and the people and companies that recognise this and plan accordingly are the ones that reap exponential rewards.
Just ask Amazon.
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The CBDC conundrum
Regular Forward readers are probably well-versed with the many perils of central bank intervention in global economies and the potentially catastrophic results â chief among them being hyperinflation.
But now, we have a new worry to consider â the growing popularity of Central Bank Digital Currency (CBDC).
As digital alternatives to fiat money emerge in the cryptocurrency sphere, governments have been quick, maybe even too quick, to begin testing government-banked digital currencies, with China already trialing its digital Yuan.
Itâs obvious that some version of these CBDCs will eventually come to pass, but as things stand, the biggest risk factor is how CBDCs may affect the role of the central bank itself. As this post explains, CBDCs may end up incentivising central banks to go from regulators to competitors, and put every other banking business at risk.
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Here are a couple of loosely framed first principles:
Humans have an inherent need to signal their status in modern society (usually through expensive property, cars and the like)
In the very near future, large parts of our identity and interactions will be completely online
If you think about it, these 2 points taken together present a problem. In an online-first world, status signalling is a whole different ballgame. Which⊠is probably why images of rocks and chubby penguins are being purchased for crazy amounts of money as NFTS.
Yes, we can practically see you rolling your eyes at this point, but itâs important to realise that this is essentially a gold rush moment for the growing crypto community. Besides signalling status by âowningâ a digital asset or seeing it as a niche investment, all these events pave the way for larger projects that unleash cryptoâs potential as a true Internet-native economy.
This could revolutionise platforms ranging from publishing to crowdfunding, as Patrick Rivera explains:
đ Come for the creator, stay for the economy
All this growing interest (and the huge amounts of money changing hands, no doubt) has got regulatory bodies increasingly interested in the crypto space, as Kyla Scanlon elaborates here:
âTwo waves in the ocean are talking to each other. The front wave tells the second that it's frightened because it is about to crash into the shore and cease to exist. But the second wave shows no fear. It explains to the first: "You are frightened because you think you are a wave; I am not frightened because I know I am part of the ocean.â
â Daniel Gottlieb, Letters to Sam: A Grandfather's Lessons on Love, Loss, and the Gifts of Life
Stuff we loved this week đ
The US withdrawal from Afghanistan is another nail in the coffin for the idea of the institutions and ruling classes, of an elite collective that is allowed to dictate terms for the masses based on tenuous claims of legitimacy backed by little substance.
A ship delayed by half an hour, a bullet that killed the wrong man. Small events really do unleash butterfly effects on the flow of time. So if you spend a lot of time trying to predict the future, this article is the one thing you need to read today.
Food for thought đĄ
Echo chamber. Cancel culture. False equivalence. Strawman argument.
Sounds like the lyrics of a dystopian rock song right? In truth, theyâre terms encountered by anyone who puts their personal opinions on the Internet with any regularity. As attention spans dwindle and nuanced debate goes out the window, speaking their mind is opening more people up to â for lack of a better word â online mob mentality.
How much intellectual life is now stifled because of fear of what a poorly worded comment would look like if taken out of context and spread on Twitter?
Edtech is in the news these days, partly thanks to Chinaâs crackdown but also for the sheer growth the sector has witnessed in the midst of the pandemic. But even as one section of learners continues their education unhindered, another group falls through the cracks of social frameworks and technological access.
Capitalism is hailed as one of the greatest things to happen to the world, compensating value creation with wealth generation. But as billionaires jet off to space instead of ending world hunger, perhaps its time to think about how those with the power of capital can allocate it intelligently for greater good.
A world where capital is assigned in accordance to personal values and the needs of the planet and society, not what generates the highest immediate return â capitalism for realists.
If you think this newsletter made your Sunday morning a little better, please spread the love and send it to your friends. Weâll see you again in two weeks.
Until next time,
Your friends at NEO