Unless you’ve been living under a rock or were just born yesterday, you’ve no doubt noticed that the western world has been undergoing staggering technological changes. For the younger generations, what we are seeing today as the digital transformation is in large part all they have known. For those of us who’ve been around a while, the changes have been like nothing we’ve seen in our or our parents’ lifetimes, which is saying a lot. However, the changes have had life-altering implications for everyone, but nothing like we will see in the future.
Consider just the last three decades. If you were born in 1992, you would be only 30 years old. In that span of time, we went from watching videos on VCRs to DVDs and are now almost exclusively viewing our entertainment digitally. We’ve gone through the same progression with listening to music. We went from no internet to slow internet to 90 percent of U.S. households having access to high-speed internet. There were no cell phones in 1992, but in 2002, more than 60 percent of Americans had cell phones, and twenty years later, most everyone is using a smartphone with millions of times more power than the computers that guided Apollo 11 to the moon.
The Birth of the Digital Transformation
All this can be traced back to 1948 when an American mathematician and engineer named Claude Shannon became the “father of modern digital communications and information theory.” One decade later, the microchip and semiconductor transistor were invented, beginning the transformation from analog to digital and forever changing life as we knew it back then.
From Digitization to Digitalization
But changes in digital technology didn’t stop there. Where digitization is the process of converting existing data into a digital format that can be used on our computers, smartphones, and anything connected to the internet, the process of digitalization (notice the subtle difference) now powers the ability of digital technology to harvest and assess data to make better business decisions and create new business models.
Through digitalization, companies are figuring out new ways to connect people digitally—companies with consumers, consumers with companies, and internally to create more efficiencies. Data analytics has become the linchpin of digitalization, collecting and evaluating the tiniest pieces of data from all these interactions to uncover and pinpoint new strategies for delivering products and services to the right people at the right time.
The Digital Transformation Has Only Just Begun
To say that these technological changes have changed everything would be an understatement, and it would be wrong. While it’s true they have been revolutionary and have impacted nearly every aspect of our lives for the better, some aspects have gone unchanged, at least for the moment. The digital information transformation began in 1948 and continues to this day. But, if you think about it, as much as it has revolutionized the way information can be exchanged, stored, and used, it is still just a different way of communicating.
I contend that another technological revolution is underway, one that began in 2008 with the publication of a white paper around a new technological development called blockchain, which later that year spawned the latest investing sensation, Bitcoin. While the world was enjoying the new and expanding use of smartphones, digital streaming, and the internet-of-things, digitization found its way into an entirely different realm—the digitization of assets.
The Next Big Technology Revolution
Whereas the first revolution beginning in 1948 transformed the information age, this next revolution is in the process of transforming how we own things. Because blockchain and cryptocurrencies are still in their infancy, we can’t begin to wrap our minds around the possibilities. We’re not just talking cryptocurrencies and their use in commerce, which is already happening. We’re talking about how we own anything—real estate, gold, companies, literally anything that can be bought, sold, and traded.
Blockchain technology is going to be the next significant disruptor of our lives. It’s already here, but the financial world is only beginning to discover its potential. That’s why it’s vital for anyone with an eye on the future, whether for business or investment purposes, to understand its possibilities. So, I am devoting my next two posts to blockchain and another technology it has spawned called smart contracts that will turn the financial world upside down. Stay tuned.
