The Future of Digital Economy

Transcript

and now to continue our session let's move to another topic that I completely that everybody is totally concerned and really care about that is the future of digital economy my professor Jason pass distinction thank you very much ben so I was a traditional friend of the head was that I was going to go first present a high level closed out with implications right now but I'm glad we switched around oh thank you for

eign [Music] Technologies and Innovation and

institutions about five or six years ago I see how many rivers and I realized that I'm thinking about crypto and chain is it's both it's institutional Innovation it's institutional technology and notion of why we're seeing this this fundamental safety in a tech Revolution that is simultaneously an Institutional relations very interesting moment in history so I want to try and locate the start of the question what is a digital economy in contrast to an industrial economy in the line of where are we in history in the argument I want to make is that

we're not just at a post-industrial kind of a moment that makes sense in the past 100 or 200 years but this is a millennial type of shift so I want to really try to check that out all right four models of the digital economy the first model is the one that was popularized by the oecd and the world economic forum and every large consultancy company over the past few decades and the argument there is that a digital economy is a sector so it's a sector in an industrial economy where you've got the health sector and the agricultural sector and the trade sector and the education sector and the digital sector the digital sector is largely

made up by all of the things that have computers who has jobs a very highly developed for America has got a large digital sector against less developed economies a small digital sector in the growth and processes of industrial sector um it's it's loved by consultancy companies because they can develop

digital strategies for your digital economy in your digital sector the universities love it because we can start to try and develop growth in jobs but it's basically the idea that if we just go through and count down all of the computers all of the internet on the internet we've got a measure of it um those measures to 310 depending on how we count where we are that's the that's the industrial version of a digital economy so that's the sort of advanced Frontier of an industrial economy that one of the industries to a new sort of set of Industries

um that's the standard model now it's the standard model in policy and strategy I think it's wrong it was it was once true but it's it's not useful to think about the future of a digital economy um we are not dealing with just another sector that's um so digital industry second way to think about it is to look at it from the perspective of economists themselves so I'm going to um is n't it picked out an economy in terms and basic division is between productivity and costs and production so

factories and machines and technology and Industrial Technologies and so on and we look at technological changing Innovation those production costs um the thing about that model is that what you take to everyone is or one of the transactions costs were Administration costs or the costs of actually keeping track of all of the administrative aspects of an economy sort of the banking system and the administrative systems and the legal systems just you ignore those things if you go that's not really the economy that's the government part of that's the administration department that's that

gets in the background [Music] dramatically lowered the costs of communication by email it took communication classes from very very large and it's expensive to send letters around the world or to use telephones in other countries to just making basically zero constantly so communication classes fail the the other the way that economists have been encouraging people to think about a digital economy is that it's a dramatic fall not in production

costs in an industrial sense a dramatic fall in communication and Administration and transactions causes an economy and the costs of verifying account identified the costs of verifying monitoring a transaction and it's not contracts and so on so that notion of thinking in a digital economy is a fundamental Revolution that cost of costs and economy but not industrial costs transactions costs and that points to administrative infrastructure exchanges in large places and decentralized that toxicity and smart Contracting and distributed reports all of the things that sort of basically

we're not used to seeing large-scale innovation of those things so that's the that's this notion that it's it's not productive it's not the factories of the certainly don't know it's the institutions and I think this is true um but it's it's not a complete vision of what do we mean by a digital product so the note that the economists of digital economy don't say a new sector they say um the costs of of our economic coordination started to form all right um the third model I'd like to introduce is one that we've got to Innovation have at rmit University in San Diego and

they have been developing over the past five years we call it institutional crypto economics and the basic idea is that it builds on that that its transactions costs that have been falling it redefines the idea of what do we mean by not a new sector in the economy that's been growing as if it was creative Industries or tourism around Advanced manufacturing but rather foreign digital economy looks like because it's not a new digital sector it's staff an Institutional staff where things that previously didn't used to be

digital marketplaces exchanges court systems Contracting systems accounting systems legal systems and so on um trade systems and that's that's the thing that is the crypto people that seems kind of obvious for most of the world it's weird and scary I think that's this this definition of what do we mean by a digital economy is we don't mean that it's got a digital sector we mean that all of the institutional components of an economy is money that's identity its contract access to its legal systems it's administrative assistance to the trade systems and exchange systems it's compliance systems are natively

together um now that that happens so that happens in phases and some parts of it like in this [Applause] just kind of fun and yet you'll notice about that is that's naturally cool it's naturally something happens and it's almost sort of pointing out the the very bottom line I've got that

energy everybody can see that but a digital full-step digital economy is something that you can build all the other digital attacks on top of how it scales out as it scales out with iot Automation and AI organization and all of the other digital automations just built and actually on yet so here we are in that line in this time of histories we are at this early early stage of building a full stack digital economy that hasn't yet stand out because the scaling isn't it better the scaling is that it becomes more to be digital with all of the other digital Technologies and Ai and iot otherwise many people but that's where the scale

and not not foreign [Music] [Music] um this is the one that I think is a little bit more interesting because it

because it takes it out of the post-industrial transition to potential and locally so and what I believe is the correct story of the time frame um so I've spent my lifetime working on economics of innovation pages that the single most important technology is right and my attention is the beginning of everything that happens to communicate asynchronously in a

decentralization in an oral Society synchronous [Music] distributed community communities everything else follows two thousand years of developing that

technology one of the last phases it's it's this [Music] where you write some signs about when I described that as business goes away but that notion of writing and families is that that's the beginning what that means is

a universal thing this is the beginning of a native level ask phases of the Industrial Revolution um 3 000 years while we were very special opportunity [Music] I think that's depend upon the way in which we think about these things these Role Models increases now from a new exciting growth sector that's

[Music] economic growth but but this will take a long time true but I think this is the correct diagnosis of the significance of web 3 Technologies and mainly digital infrastructure as the basis of a new type of economy and that's the way in which a digital economy is not just a sort of acute sort of phrase accusative marketing phrase to describe the late industrial era um we're at the beginning of a new era and digital economy is fundamentally built upon this technology with that I will close and having foreign