The world is on the cusp of a digital revolution, with innovation altering the way we do everything from using appliances and devices to conducting financial transactions.

New asset classes

The digital economy is growing at a fast pace around the world. Today’s digital economy is characterized by the creation of new asset classes and the digitization of traditional assets. Emerging technologies such as blockchain, artificial intelligence (AI), the Internet of Things (IoT) and 3D printing play a critical role in driving this growth.

New technologies present assets that have the potential to dominate the global economy in the future. For example, the blockchain has virtual coins and tokens whose popularity has grown exponentially in a short period of time.

Big players coming into the game

The blockchain allows users to transact securely and much faster than traditional methods. Blockchain’s features have attracted many prominent technology and financial companies, including IBM, Oracle, JP Morgan Chase, and Boeing. For example, IBM recently partnered with Stronghold, a fintech company, to launch a dollar-backed cryptocurrency called Stronghold USD. This virtual currency is an example of how consumer confidence in a traditional asset (fiat USD in this case) is used to back a digital asset.

There are also examples where companies combine two new technologies to provide solutions for the future. Aerospace giant Boeing recently announced a collaboration with artificial intelligence firm SparkCognition to develop blockchain-powered traffic management solutions for unmanned aerial vehicles.

The game changer

Asset tokenization is not limited to traditional assets like currencies. The new marketplace can use the intrinsic value of a wide variety of assets to provide security tokens. The blockchain can be a differentiating factor between security tokens and traditional securities. The use of smart contracts on the blockchain eliminates the need for a middleman, thus reducing transfer costs. This usability of the blockchain has the potential to significantly affect the traditional banking system. It can also eliminate the need for money as a medium of exchange, since all assets are liquid, instantly available, and divisible.

Automation and artificial intelligence have already made their mark in many markets. Trading algorithms have outperformed human traders. In the manufacturing sector, machines have taken over many of the jobs previously performed by humans.

Need for a new framework

In this rapidly changing economy, it is no longer possible to rely on traditional models and methods for decision making. In order to keep up with new developments such as DAO, AI, VR, P2P, and M2M, it is imperative that we develop a new framework. In other words, we need to move beyond Munger’s mental models and focus on digital models, such as network theories and exponential growth models.

The digitization of our economy is occurring at a rapid pace. Over time, we will get a clearer picture of what developments will dominate this new web 3.0 economy, but it is clear that this economic revolution is taking place on a global scale.