A New Perspective: Introducing the Decentralized Economy
Article by Tom Serres
An efficient economy will always rely on the speed and depth of information to establish equilibrium. The expectations of modern consumers have skewed and strained these economic paradigms like never before. People can now shop wherever they want, whenever they want merely by picking up their smartphones. This has left suppliers scrambling to keep up.
To further exaggerate the inefficiencies, despite the recent influx of transformative technologies like AI, IoT, and blockchain into the supply chain, the innovations lack consistency, uniformity, and scale. Such shortcomings keep the supply chain susceptible to communication gaps and information silos, preventing seamless distribution of information and goods. Enter the need for a decentralized economy.
Autonomous Machines for Human Benefit
Traditional supply chains segment their components. Participants typically lack sufficient incentive to share information with other participants due to the economic benefits derived from asymmetrical data. Those with more relevant data hold a substantial competitive advantage over those that don’t. Therefore, they are not motivated to change their processes and procedures. While such an imbalance often separates the winners from the losers, it’s ultimately the consumer base that suffers. These dynamics lead to higher prices, inventory shortages, and fewer choices in goods available.
A decentralized economy removes the data-based competitive advantage held by few for the benefit of all. Rather than creating value through the inefficient distribution of information, a decentralized economy rewards participants that freely share logistics data and invest i human talent and innovation.
This adaptable, cognitive network of interconnected technologies replaces the latencies generated by human interference in supply chains and replaces it with machine trust, ultimately for the good of the consumer. Simply put, humans are removed from much of the logistics equation to maximize the benefit we derive from a frictionless, imminently efficient trade framework as long as the technologies are given sufficient autonomy. Humans must learn to get out of the way for a decentralized economy to function.
Change Is Coming
A decentralized economy is one with few, if any, barriers to the immediate and open dissemination of information. This involves removing impediments like third-party intermediaries and clearinghouses along the way. Relative to the supply chain, decentralization incorporates innovation in the most efficient, effective manner possible. Technological solutions from assorted vendors adhere to universal standards, seamlessly linking communication between the many segments along the supply chain . This mitigates against information silos.
A push towards decentralization is of a piece with historical economic trends. An automated, autonomous supply chain is a fundamental component of that evolution, utilizing blockchain to streamline the many processes while removing unnecessary third parties from the framework.
Supplemented by the unique, prescient abilities of AI and IoT-based technologies, transactions occur directly between the consumer and vendor. The logistical data feeding into interconnected systems instantaneously pulls information regarding production, distribution, and delivery to find the most efficient path. The process automatically integrates short-term variables like weather patterns and production capacity along with shifting consumer affinities and other long-term factors to link supply with demand in the most optimal combination possible.
The Future of Decentralization
A decentralized economy incentivizes shared information across a cognitive supply chain. This is driven by AI, IoT, on-demand manufacturing, and blockchain technology, which connects the components to a shared single state. Firms derive value from innovating rather than operating in closed networks that produce excessive deadweight loss. Individual companies and industries that invest in technologies like AI and IoT are deriving current benefit while simultaneously establishing a foundation for the cognitive supply chains of tomorrow.
Once the marketplace embraces these technologies, it will become extraordinarily nimble, making spontaneous changes to maximize efficiency and value. Consumers will be able to place mobile orders for products that suppliers then immediately produce through additive manufacturing technologies. Buyers can then make payments directly to the vendor through a highly secure and reliable transaction network driven by blockchain. No need for a bank or credit card company intermediary.
Once suppliers manufacture a product, they can then distribute it directly to consumers through an interconnected network of participants and capital assets. Variables like poor weather and road conditions are instantaneously worked around by AI-based platforms and IoT-equipped machinery. The entire supply chain in a decentralized economy is autonomous and prescient. It removes unnecessary intermediaries while maximizing speed and agility through logistics networks linked and fortified by blockchain. Those that make the necessary investments to participate in such a decentralized economy are building the framework to unlock unfathomable levels of created value in the future. To learn more about these topics, download the Animal Ventures Asset Chains report.