{"id":1214,"date":"2021-03-10T11:56:10","date_gmt":"2021-03-10T11:56:10","guid":{"rendered":"http:\/\/janbosch.com\/blog\/?p=1214"},"modified":"2021-03-10T11:56:11","modified_gmt":"2021-03-10T11:56:11","slug":"your-money-isnt-real","status":"publish","type":"post","link":"https:\/\/janbosch.com\/blog\/index.php\/2021\/03\/10\/your-money-isnt-real\/","title":{"rendered":"Your money isn\u2019t real"},"content":{"rendered":"\n
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Image by Darwin Laganzon from Pixabay<\/figcaption><\/figure>\n\n\n\n

Last week, my spaceship got destroyed, I read about NFTs and I pondered about bitcoin. Allow me to explain how this is all related. As I mentioned in an earlier post, occasionally I play Eve Online, an open world set in space. The most valuable areas in the game in terms of resources and loot are also the places where there are no rules. In this dog-eat-dog world, any player can attack you, kill you and take all your valuables. This is exactly what happened to me \u2013 which made me really sad and upset. Until I remembered that we\u2019re talking about a few flipped bits in a computer in, I think, Iceland.<\/p>\n\n\n\n

This weekend, I read about NFTs or non-fungible tokens. According to \nWikipedia, these are cryptographic tokens that represent a unique \ndigital asset, such as art, digital collectibles and online gaming \nassets. Who cares, you might ask, but when NFT-based art pieces are \nstarting to get sold by Christie\u2019s to the turn of 3.5 million dollars \nand NFT sales last year totaled about 250 million (up 300 percent from \nthe year before), it\u2019s obvious that there\u2019s a group of people that \nconsiders these NFTs valuable.<\/p>\n\n\n\n

Last week, I also read that Tesla has added 1.5 billion dollars in \nbitcoin to its balance sheet. A decentralized digital cryptocurrency. A \nbunch of numbers on a computer. Difficult to calculate numbers, \nadmittedly, as it\u2019s cryptographically ensured and hence bitcoin mining, \nbut still. A car company buying some numbers to the tune of 1.5 billion?\n What the heck\u2019s going on here?<\/p>\n\n\n\n

None of these assets are real as in we\u2019re unable to physically touch or hold them. And during my run this morning, I realized that this is nothing exceptional. Many of the things we use in our day-to-day existence aren\u2019t real. The prime example is money, of course. This asset plays an enormously important role in our lives and industry, but of course, it isn\u2019t real. Even if you hold pieces of paper or coins, their inherent value doesn\u2019t represent the actual value. Money works because we\u2019ve created a common, inter-subjective illusion of the value of money that makes society work.\u00a0\u00a0 <\/p>\n\n\n\n

As a society, we\u2019re constantly creating new forms of value. With \ndigitalization, these are becoming increasingly virtual. This is great \nfrom an environmental perspective as increases in living standards are \nbecoming less correlated with an increased use of physical resources.<\/p>\n\n\n\n

The statement that more and more value is created in digital form may\n sound obvious, but many of us only realize the new form of value way \ntoo late to do something useful with it. I remember that an uncle of \nmine, who ran a very successful plumbing company, showed us his new \nmobile phone in the early 1990s. My father could, for the life of him, \nnot understand why anyone would want such a device. This was when he \ndrove 60,000 kilometers per year and he could have used all that time in\n the car to get half his job done with a mobile phone.<\/p>\n\n\n\n

Human needs haven\u2019t really changed over the millennia. We all want to\n feel safe, compete in hierarchies of our choice and learn and develop. \nHowever, the form this takes changes continuously. We have mobility \nneeds evolving from sandals to shoes to horses to cars to trains to \nairplanes. We want to communicate with loved ones and this has evolved \nfrom speech to letters to phones to email to video conferencing and \nFacebook. This relates to the late Clayton Christensen\u2019s notion of the \njob a product is designed to do. It\u2019s never about the product, eg a \ntruck, but always about the job that you\u2019re looking to get done, eg \ntransporting goods. And when a better way of doing that job is created, \nwe move on.<\/p>\n\n\n\n

One of my concerns is that I, and many with me, don\u2019t realize the \nimportance and relevance of new ways to create value, especially through\n digital assets. Interestingly, when software was first introduced and \nstarted to scale in the 1970s, there was a large movement among the \nprogrammers of that age that software should be freely shared with \neveryone as one couldn\u2019t or even shouldn\u2019t have to charge for non-real \nassets. The open-source community still maintains part of that culture.<\/p>\n\n\n\n

Part of the problem of recognizing the value of new digital assets is\n that early in the creation of a new asset, there often is a religious \nfervor around it. Try to criticize a cryptocurrency like bitcoin to \nthose holding these in their portfolio and see what their reaction is. \nThere\u2019s an incredibly strong belief among the supporters that bitcoin \nisn\u2019t just an incredibly valuable asset that will only increase in \nvalue. It also is a way to break the control of governments and banks \nover oppressed citizens. For those of us that don\u2019t feel that oppressed \nand aren\u2019t calling for the revolution, it\u2019s easy to get put off by the \npolitical aspects of a new digital asset and miss the actual value it \nprovides.<\/p>\n\n\n\n

The second challenge is that both customers and companies often feel \nthat the new digital asset is viewed as fishy and unethical. For \ninstance, still in the embedded-systems industry, the collection of data\n around the use of products and the monetization of this data is viewed \nas wrong and hence the collection and use of data is deprioritized until\n it\u2019s obvious that everyone in the ecosystem accepts this as the normal \nway of operating. The problem is that by that time, all the business \nopportunities resulting from the data have already been captured by \nothers and you\u2019re playing a catch-up game to try and limit the damage to\n your business.<\/p>\n\n\n\n

The third challenge is that by making the digital asset valuable, \nother, more traditional technologies and assets are made less valuable. \nThis typically affects existing power structures and hierarchies in \nexisting companies. If mechanics and electronics are commoditizing and \nsoftware, data and AI are increasingly differentiating, we need to \nprioritize resources differently, outsource technologies that used to be\n differentiating, reorganize around the differentiating technologies, \nand so on.<\/p>\n\n\n\n

Digitalization brings with it new digital assets that are valuable in ways that for us skeptics and traditionalists are hard to understand and appreciate. Categorically rejecting these new forms of value creation, however, puts you at a significant disadvantage because, by the time you realize their value, all business opportunities have been capitalized on already. Instead, we need to develop hypotheses on how and why new assets might be valuable, validate the underlying assumptions and experiment with these assets to better understand the community driving this forward. In a digital world, nobody can afford to be an analog dinosaur.<\/p>\n\n\n\n

To get more insights earlier, sign up for my newsletter at <\/em>jan@janbosch.com<\/em><\/a> or follow me on<\/em> janbosch.com\/blog<\/em><\/a>, LinkedIn (<\/em>linkedin.com\/in\/janbosch<\/em><\/a>), Medium<\/a> or Twitter (<\/em>@JanBosch<\/em><\/a>).<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Last week, my spaceship got destroyed, I read about NFTs and I pondered about bitcoin. Allow me to explain how this is all related. As I mentioned in an earlier post, occasionally I play Eve Online, an open world set in space. The most valuable areas in the game in terms of resources and loot … Read more<\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"generate_page_header":"","footnotes":""},"categories":[8,10],"tags":[],"_links":{"self":[{"href":"https:\/\/janbosch.com\/blog\/index.php\/wp-json\/wp\/v2\/posts\/1214"}],"collection":[{"href":"https:\/\/janbosch.com\/blog\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/janbosch.com\/blog\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/janbosch.com\/blog\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/janbosch.com\/blog\/index.php\/wp-json\/wp\/v2\/comments?post=1214"}],"version-history":[{"count":1,"href":"https:\/\/janbosch.com\/blog\/index.php\/wp-json\/wp\/v2\/posts\/1214\/revisions"}],"predecessor-version":[{"id":1216,"href":"https:\/\/janbosch.com\/blog\/index.php\/wp-json\/wp\/v2\/posts\/1214\/revisions\/1216"}],"wp:attachment":[{"href":"https:\/\/janbosch.com\/blog\/index.php\/wp-json\/wp\/v2\/media?parent=1214"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/janbosch.com\/blog\/index.php\/wp-json\/wp\/v2\/categories?post=1214"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/janbosch.com\/blog\/index.php\/wp-json\/wp\/v2\/tags?post=1214"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}