Moneyweb: Apple, Facebook and Google are dinosaurs in the world of blockchain, says author George Gilder.
A decade ago the world’s leading companies were Exxon, Walmart, China National Petroleum and the Industrial and Commercial Bank of China.
Today it’s Apple, Alphabet (Google’s holding company), Amazon, Microsoft and a little further down the list, Facebook.
In Life After Google, author George Gilder wonders which titans of business will dominate 10 years from now. Historical evidence suggests it won’t be Google, Amazon or any of the other familiar tech names (though Microsoft gets an honourable mention for its decades-long durability as a business leviathan).
It’s hard to imagine a world where Google isn’t the dominant search engine.
It currently accounts for 88% of all global searches, a figure only moderately lower than the 90% recorded in 2013. It is used 5.6 billion times a day. It digitised the entire earth, the sky, gave street maps away for free, and has changed the world as we know it. It built massive data centres to process the unfathomable quantity of information spewing out into the world each day and then dish out search results in a fraction of a second.
Google was, and is, brilliant. Information became free and instant.
Google’s business model is to offer all this free to users, while selling advertising linked to searches. Last year parent company Alphabet’s revenue sailed past US$100 billion, most of this from ad revenue which has been growing at about 20% a year but is now slowing down.
Google may dominate information search, but by 2017 Amazon captured 52% of product searches. Amazon’s product reviews, dodgy though some of them may be, are more trusted than Google’s paid ads. Amazon has also beaten Google in selling cloud services. Google’s next big gamble was artificial intelligence (AI), but here again Amazon appears to be winning the race with voice activated AI.
The ability to gather massive volumes of information and then discern social and other patterns has landed on our doorsteps with such suddenness that there is a justifiable fear that humans will become slave stock, lorded over by AI machines and robots. That fear is overblown. Alan Turing, whose development of the Turing machine decoded Germany’s war-time codes, learned that computers needed ‘oracles’ to give them instructions and judge their outputs. Otherwise they go in loops, forever. There is no observer to make sense of the information.
This is why Turing also believed physics stumbled on its own self-referential measurements: you cannot measure atoms and electrons using instruments made of atoms and electrons. The oracle is absent.
Gilder doesn’t see much of a future for Google, principally because it has lost sight of the internet primarily as a means of communication that also allows information to be copied and replicated. There is huge backlash against Google and Facebook for allegedly skewing search results and censoring views they deem disagreeable. They have gone from town square, a place where people interact online, to town crier, where the tweak of an algorithm can sway voters and potentially unseat governments.
A new breed of company is about to swallow it.
“Emerging is a peer-to-peer swarm of new forms of direct transactions beyond national borders and new forms of Uber and Airbnb beyond corporate gouges,” says Gilder.
Unbundling the huge centralisation of the money system?
Gilder claims the next phase in societal evolution, accelerated by the decentralisation implicit in blockchain, will undo Google and unbundle the huge centralisation of the money system.
Blockchain is the coming wave. New forms of currency, detached from any form of central bank or government control, potentially threaten the very notion of nation states. Once you weaken money control from governments, you weaken their power to rule. Blockchain allows peer-to-peer transactions without an intermediary. Currency restrictions and central bank controls are entirely hollow in this new universe. You can become your own bank, store your money on a flash drive, and send it to whoever you want at the speed of light.
Legal contracts can be liberated from lawyers and their tortured English and logged on the blockchain. It is a way of removing those in the middle, the go-betweens, and creating true peer-to-peer transactions in a secure and private manner.
That none of the overblown claims for crytpos or blockchain have yet materialised is seen by some as evidence that they are fuelled by hype and little else.
But as Gilder points out, we are just 10 years into the blockchain revolution. The naysayers whine from the womb of an established financial system that has crippled world capitalism with a 10-year global recession. They see only incremental improvements built around central banks, forex markets and giant banks feasting off the entitlements of banking and legal tender laws.
Their monopoly on money creation is coming to an end and it will be deadly for them, but invigorating for humanity.
Bitcoin’s flaw is the same as all other fiat currencies in that its price changes with demand. Currencies are mere measures of value creation, they are not wealth in themselves. No basic unit of measure – whether the second, the kilogram or the ampere – changes in value. They are standards based on physical constraints. Bitcoin mining will end abruptly in 2140, which means no new currency will thereafter come into being.
New crypto developers are learning from these shortcomings of artificial scarcity and the time value of money, and will be able to build better currencies without these flaws. Bitcoin’s founder ‘Satoshi Nakamoto’ was correct to mimic gold’s scarcity and slow-feed release by way of ‘mining’, but did not fully grasp the sources of gold’s success.
The Google era is coming to an end, says Gilder, “because Google tries to cheat the constraints of economic scarcity and security by making its goods and services free”.
Google’s success was built on brilliant algorithms and centralised data.
The next wave will be decentralisation of the kind promised by bitcoin and blockchain, where no single entity can end up in control of so much data.
In other words, individuals may no longer be prepared to hand over their data (search requests and internet trail) to companies such as Google and Facebook for free, when others are prepared to pay them for that.
The free lunch may be coming to an end.