Digitalization, Disintermediation, Democratization and Decentralization

“The red pill and its opposite, the blue pill, are popular culture symbols representing the choice between embracing the sometimes painful truth of reality (red pill) and the blissful ignorance of illusion (blue pill).”

 

The 4Ds of 4th industrial revolution, evolved from the digital innovation, has rewritten the entire production function with emphasis on different factors. Today Data, Time and Capital Raising Ability are more important than land, labour and capital.

  1. Digitalization (and Digitization)
  • Digitization is the conversion of text, pictures, video, and audio into a digital form that can be processed by a computer.
  • Digitizing or digitization is the representation of an object (live or dead), image, sound, document or signal by generating a series of numbers that describe a discrete set of its points or samples.
  • Digitization will lead to Digitalization via Monetization.
  • Digitalization is the use of digital technologies to change a business model and provides new revenue and value-producing opportunities.
  • Digitalization is the process of moving to a digital business.

2. Disintermediation

 

  • Disintermediation is the process of getting rid or bypassing the middlemen to deal directly or to facilitate peer to peer transactions.
  • Those with a market value and tradable among middlemen or on a middlemen physical or virtual platform, are now tradable without a middlemen with disintermediation.
  • Many economies that thrived on being the trading centres for goods and services are now facing the biggest test of sustainability.
  • Others that generated a huge GDP through entreport trade, handling billion dollars of trade a day, face the prospect of disintermediation.
  • Peer-to-Peer digital pricing has enabled Shadow Prices to become trading prices through a network and bounty market economy.
  • Without exchanges, Peer-to-Peer Digital Price discovery of a shadow or underground economy has great implications for productivity of a market economy that depends solely on Market Prices.
  • Market priced productivity, in its current form, will ceased to be an useful measure.

3. Democratization

  • Democratization refers to the process by which technology and services become accessible to people who are underserved or unserved.
  • New design of technologies, improved user experiences and lower fees through scaling and mass production have empowered those previously underserved or unserved to access and use technological products and services.
  • With mass production and increased demand of affordable and user friendly products, we have seen the democratization of technology, democratization of finance, and democratization of information.
  • Democratization has led to higher consumption and GDP growth.

4. Decentralization

• Decentralization is the process where more decisions and operations are gradually distributed without a single point of control or failures or processing.

 

  • Norman Johnson of Los Alamos National Laboratory wrote in a 1999 paper:

“A decentralized system is where some decisions by the agents are made without centralized control or processing.

An important property of agent systems is the degree of connectivity or connectedness between the agents, a measure global flow of information or influence.

If each agent is connected (exchange states or influence) to all other agents, then the system is highly connected.”

 

  • In such a decentralized system, there is no single centralized authority that makes decisions on behalf of all the parties.
  • Instead each party, also called a peer, makes local autonomous decisions towards its individual goals which may possibly conflict with those of other peers.
  • Peers directly interact with each other and share information or provide service to other peers.
  • Decentralization in an asset (Stake Holder) sharing economy may lead to more equitable growth and distribution.

Source: Crypto New Media

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