The next decade will be the “decade of the digital” and 2022 will set the tone for the following innovation. Just looking at key technologies or products means missing the forest in front of your eyes. It is imperative to understand the underlying tensions this year as innovation and regulation come to a head as an existential crisis ravages the real world.
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The year ahead will be underscored by three key constructs: replicating the physical in the digital; Rewrite digital sovereignty; and asset allocators and ESG.
Replicating the physical in the digital The Metaverse has grown from a technopunk dream to a collective term that encompasses cryptocurrency, AR / VR interactions, virtual games, and other such technologies. Although the technology can be different, the main principle is the same: “Replicate the physical to the digital”. All of our current means of interaction and transaction – meetings, hangouts, tourism, finance, investments, education – are translated into silico. The metaverse itself will be diverse, with different players offering their vision of it. But far from the norm of competing products or services, the Metaverse will offer a competing vision of digital reality that runs parallel to our real life.
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Their trends are already visible in gaming and esports, where the life and economy of millions is simulated and lived every day. Fortnite, Minecraft, GTA V offer all facets of modern life – concerts, transactions with real money, virtual meeting places, replicas of famous historical and fictional landmarks. Social media companies are catching up on this revolution that few in the mainstream know, let alone understand.
The true digital native will no longer be one who is familiar with the Internet, but one who feels comfortable with such replications. Cryptocurrency and blockchain will serve as a means of accessing one’s own resources across all metaverse, and the key principle of the metaverse is that there will not be a single metaverse – it will be a collection of them, like countries that will lead to the definition Conflict of our time.
Reformulating digital sovereignty Governments around the world are threatened by the metaverse and its ability to satisfy people’s lives without state oversight. Protecting the sovereignty of governments in the digital world collides with the laissez-faire principles of the Metaverse, and tensions between these forces will come to the fore this year.
Corporations have already usurped the powers of governance. These include protecting rights such as freedom of expression outside state oversight (the new CEO of a controversial social media company commented on this); Creation of its own currency (which the CEO of another controversial social media company announced in collaboration with other companies); and governance tokens that allow the user to make a truly democratic decision on the future of a blockchain that resides as a digital public good.
Innovation has always overtaken regulation and governments have always caught up. But when governments become aware of these tectonic shifts, their response will indelibly shape the future.
Asset Allocators and ESG COVID-19 has exposed the fragility of the current order due to force majeure events. The lack of capital to support systemic resilience has been exposed around the world. The emerging trend among asset allocators around the world is to use capital as a vehicle to drive positive change. ESG is the scoring framework that will underpin investment decisions over the coming year as climate technology, electric mobility, sustainable energy and health wean the dollars traditionally reserved for fossil fuel giants. The recent COP26 has moved private actors to take the lead in investing in a better future and a means to survive whatever nature throws on our species. For those who may scoff at the pace of change, their later fate is best captured by the parting words of Nokia CEO Stephen Elop when he announced the sale of Nokia to Microsoft in 2016: “We didn’t do anything wrong, but somehow we did we lost “. The future is now. After all, meta late than never.
Siddarth Pai is founding partner | CFO | ESG officer at 3one4 Capita
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